MANAGEMENT DISCUSSION AND ANALYSIS REPORT
GLOBAL ECONOMY
Overview: The global economic growth was estimated at a slower 3.4% in 2022,
compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic
effect). The relatively slow global growth of 2022 was marked by the Russian invasion of
Ukraine, unprecedented inflation, pandemic- induced slowdown in China, higher interest
rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.
The challenges of 2022 translated into moderated spending, disrupted trade and
increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades.
US consumer prices increased about 6.5% in 2022, the highest in four decades. The Federal
Reserve raised its benchmark interest rate to its highest in 15 years. The result is that
the world ended in 2022 concerned that the following year would be slower.
Global FDI inflows - equity, reinvested earnings and other capital - declined 24% to
nearly USD1.28 trillion in 2022. Global trade expanded by 2.7% in 2022 (expected to slow
to 1.7% in 2023). (Source: OECD, WTO data)
The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of
4,319.55 in June 2022 to 3,495.76 in December 2022. There was a decline in crude oil,
natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil
dropped from a peak of around USD 120 per barrel in June 2022 to USD 80 per barrel at the
end of the calendar year following the enhanced availability of low-cost Russian oil.
| Regional growth (%) |
2022 |
2021 |
| World output |
3.4 |
6.3 |
| Advanced economies |
2.7 |
5.4 |
| Emerging and developing economies |
4.0 |
6.9 |
Performance of major economies
United States:
Reported GDP growth of 2.1% compared to 5.9% in 2021
China: GDP growth was 3% in 2022 compared to 8.1% in 2021
United Kingdom:
GDP grew by 4.1% in 2022 compared to 7.6% in 2021
Japan: GDP grew 1.7% in 2022 compared to 1.6% in 2021
Germany: GDP grew 1.8% compared to 2.6% in 2021
(Source: PWC report, EY report, IMF data, OECD data)
Outlook: The global economy is expected to grow 2.8% in 2023, influenced by the
ongoing Russia- Ukraine conflict. Concurrently, global inflation is projected to fall
marginally to 6.6%. Despite these challenges, there are positive elements within the
global economic landscape. The largest economies like China, the US, the European Union,
India, Japan, the UK and South Korea are not in a recession. Approximately 70% of the
global economy demonstrates resilience, with no major financial distress observed in large
emerging economies. The energy shock in Europe did not result in a recession and
significant developments, including Chinas progressive departure from its strict
zero-covid policy and the resolution of the European energy crisis, fostered optimism for
an improved global trade performance. Despite high inflation, the US economy demonstrated
robust consumer demand in 2022. Driven by these positive factors, global inflation is
likely to be still relatively high at 4.3% in 2024. Interestingly, even as the global
economy is projected to grow less than 3% for the next five years, India and China are
projected to account for half the global growth (Source: IMF).
INDIAN ECONOMY
Overview: Even as the global conflict remained geographically distant from ndia,
ripples comprised increased oil import bills, inflation, cautious government and a
sluggish equity market. Indias economic growth was 7.2% in FY 2022-23. India emerged as
the second fastest- growing G20 economy in FY 2022-23. ndia overtook UK to become the
fifth-largest global economy. India surpassed China to become the worlds most populous
nation (Source: IMF, World Bank)
Growth of the Indian economy
|
FY 20 |
FY 21 |
FY 22 |
FY 23 |
| Real GDP growth (%) |
3.7 |
-6.6% |
9.1 |
7.2 |
Growth of the Indian economy quarter by quarter, FY 2022-23
|
01FY23 |
02FY23 |
03FY23 |
04FY23 |
| Real GDP growth (%) |
13.1 |
6.2 |
4.5 |
6.1 |
According to the India Meteorological Department, the financial year 2023 delivered 8%
higher rainfall over the long-period average. Due to unseasonal rains, Indias wheat
harvest was expected to fall to around 102 Million Metric Tons (MMT) in FY 2022-23 from
107 MMT in the preceding year. Rice production at 132 Million Metric Tons (MMT) was almost
at par with the previous year. Pulses acreage grew to 31 Million hectares from 28 Million
hectares.
Due to a renewed focus, oilseed area increased by 7.31% from 102.36 Lakh hectares in FY
2021-22 to 109.84 Lakh hectares in FY 2022-23.
Indias auto industry grew 21% in FY 2022-23; passenger vehicle (UVs, cars and vans)
retail sales touched a record 3.9 Million units, crossing the previous high of 3.2 Million
units in FY 2018-19. The commercial vehicles segment grew by 33%. Two-wheeler sales fell
to a seven-year low; the three-wheeler category grew 84%.
The banking systems total gross nonperforming assets (NPAs) fell to 3.9% from 6.5% a
year ago. A further drop of 3.6% is expected in FY 2023-24. (Source: RBI data)
As Indias domestic demand remained steady amidst a global slowdown, import growth in
FY 2022-23 was estimated at 16.5% to USD 714 billion as against USD 613 billion in FY
2021-22. Indias merchandise exports were up 6% to USD 447 billion. Indias total exports
(merchandise and services) grew 14% to a record of USD 775 billion and is expected to
touch USD 900 billion in FY 2023-24. Indias current account deficit, a crucial indicator
of the countrys balance of payments position, was USD 67 billion or 2% of GDP. Indias
fiscal deficit was in nominal terms at - 717.55 Lakh Cr, which is 6.4% of the countrys
GDP for the year ending March 31, 2023.
Indias headline foreign direct investment (FDI) numbers rose to a record USD 84.8
billion in FY 2021-22, Flowever, during the fiscal year 2022- 23, the country experienced
a 16% decrease in foreign direct investment (FDI) inflows, amounting to USD 71 billion on
a gross basis. This decline can be attributed to the unfavourable global economic
conditions and stands as the first contraction in FDI in the past ten years.
Indias foreign exchange reserves, which had witnessed three consecutive years of
growth, experienced a decline of approximately USD 70 billion in FY 2022-23, primarily
influenced by rising inflation and interest rates. Starting from USD 606.47 billion on
April 1, 2022, reserves decreased to USD 578.44 billion by March 31, 2023. The Indian
currency also weakened during this period, with the exchange rate weakening from 775.91 to
a US dollar to 782.34 by March 31, 2023, driven by a stronger dollar and an increasing
current account deficit. Despite these factors, India continued to attract investable
capital.
The countrys retail inflation, measured by the consumer price index (CPI), eased to
5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI (calculates the
overall price of goods before retail) eased to I.3% during the period. In 2022, CP hit its
highest of 7.79% in April; WP reached its highest of 15.88% in May 2022. By the close of
the year under review, inflation had begun trending down and in April 2023 declined below
5%, its lowest in months.
Indias total industrial output for FY 2022-23, as measured by the Index of Industrial
Production or IIP grew 5.1% year-on-year as against a growth of 11.4% in FY 2021-22.
India moved up in the Ease of Doing Business (EoDB) rankings from 100" in 2017 to
63rd in FY 2022-23. As of March 2023, Indias unemployment rate was 7.8%.
In FY 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher
than the Budget estimates. Tax-GDP ratio was estimated to have improved by II. 1% Y-o-Y in
renewable energy 2022-23. The government is also estimated to have addressed 77% of its
disinvestment target in FY 2022- 23 (750,000 Cr against a target of 765,000 Cr).
Gross tax collection of goods and services (GST) for FY 2022-23 was 718.10 Lakh Cr,
with an average of 71.51 Lakh a month and up 22% from FY 2021-22, Indias monthly GST
collections hit the second highest ever in March 2023 to 71.6 Lakh Cr. For FY 2022-23, the
government collected 716.61 Lakh Cr in direct taxes, according to data from the Finance
Ministry. This amount was 17.6% more than what was collected in the previous fiscal.
Per capita income almost doubled in nine years to 7172,000 during the year under
review, a rise of 15.8% over the previous year. Indias GDP per capita was 2,320 USD
(March 2023), close to the magic figure of USD 2,500 when consumption spikes across
countries. Despite headline inflation, private consumption in India witnessed continued
momentum and was estimated to have grown 7.3% in 2022-23.
Outlook: There are green shoots of economic revival, marked by an increase in rural
growth during the last quarter and an appreciable decline in consumer price index
inflation to less than 5% in April 2023. India is expected to grow around 6-6.5% (as per
various sources) in FY 2023- 24, catalysed in no small measure by the governments 35%
capital expenditure. The growth could also be driven by broad-based credit expansion,
better capacity utilisation and improving trade deficit. Fleadline and core inflation
could trend down. Private sector investments could revive. What provides optimism is that
even as the global structural shifts are creating a wider berth for Indias exports, the
country is making
its largest infrastructure investment. This unprecedented investment is expected to
translate into a robust building block that, going ahead, moderates logistics costs,
facilitates a quicker transfer of products and empowers the country to become increasingly
competitive. This can benefit Indias exports in general, benefiting several sectors. The
construction of national highways in 2022-23 was 10,993 kilometers; the Ministry of Road
Transport and highways awarded highway contracts of 12,375 km in the last financial year
The global landscape favours India: Europe is moving towards a probable recession, the
US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP growth
of 7.2% and America and Europe is experiencing its highest inflation in 40 years.
Indias production-linked incentive appears to catalyse the downstream sectors.
Inflation is steady. India is at the cusp of making significant investments in various
sectors and emerge as a suitable industrial supplement to China. India is poised to
outpace Germany and Japan and emerge as the third-largest economy by the end of the
decade. The outlook for private business investment remains positive despite an increase
in interest rates. India is less exposed to Chinese economic weakness, with much less
direct trade with China than many Asian peers.
Broad-based credit growth, improving capacity utilisation, governments thrust on
capital spending and infrastructure should bolster investment activity. According to our
surveys, manufacturing, services and infrastructure sector firms are optimistic about the
business outlook. The downside risks are protracted geopolitical tensions, tightening
global financial conditions and slowing external demand. (Source: IMF data, RBI data.
Union budget 2023-24 data, CRISIL report. Ministry of Trade & Commerce, NSO data)
Union Budget FY 2023-24 provisions
The Budget 2022-23 sought to lay the foundation for the future of the Indian economy by
raising capital investment outlay by 33% to 710 Lakh Cr, equivalent to 3.3% of GDP and
almost three times the 2019-20 outlay, through various projects like PM Gati-shakti,
nclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities,
Energy Transition and Climate Action, as well as Financing of Investments. An outlay of
75.94 Lakh Cr was made to the Ministry of Defence (13.18% of the total Budget outlay). An
announcement of nearly 720,000 Cr was made for the PM Gati- Shakti National Master Plan to
catalyse the infrastructure sector. An outlay of 7 1.97 Lakh Cr was announced for
Production Linked Incentive schemes across 13 sectors. The Indian government intends to
accelerate road construction in FY 2023-24 by 16-21% to 12,000-12,500 km. The overall road
construction project pipeline remains robust at 55,000 km across various execution stages.
These realities indicate that a structural shift is underway that could strengthen ndias
positioning as a long-term provider of manufactured products and its emergence as a
credible global supplier of goods and services.
INDIAN CONSUMER ELECTRONICS INDUSTRY OVERVIEW
Indias consumer electronics market is one of the fastest-growing globally, ranking
fifth in terms of size. Indias consumer electronics industry is projected to expand
significantly, with a market size estimated to reach USD 34 billion by 2025. This growth
can be attributed to the rising disposable income and technological advancements in the
country, leading to an increased demand for various consumer durable goods. As a result,
intense competition has emerged among the numerous consumer durable brands operating in
India. Multinational organisations perceive India as a key market that is expected to
drive future growth.
The Indian appliances and consumer electronics industry stood at USD 9.84 billion in
2021, and is expected to more than double to reach Rs.1.48 Lakh Cr (USD 21.18 billion) by
2025. This growth will primarily be driven by an increase in the volume of consumer
electronics sold. Between the period of April 2000-June 2022, electronic goods attracted
FDI inflows of USD 3.68 billion. The consumer electronics sector is expected to witness
significant growth due to the governments decision to bring the sector under the
production-linked incentive (PLI) scheme and easy credit access.
The refrigerator market in India is poised for remarkable growth, with a projected
compound annual growth rate (CAGR) of 10.2% from 2023 to 2031. By 2031, the market is
estimated to achieve a total worth of USD 9,988.45 Million, compared to USD 4,602.6
Million in 2022.The Indian refrigerator market achieved a remarkable milestone in 2022,
with the sale of 13,804 thousand units.
This significant volume of units sold contributed to the markets total value of USD
4,602.6 Million in the same year.
The size of Indias television industry is estimated to reach 30.4 Million units in
2026. It was around 20 Million units in 2022. The home theater market is estimated to grow
at a CAGR of 8.51% and the size of the market is forecasted to increase by USD 7.4 billion
between 2022 and 2027.
The Indian air conditioner market was valued at USD 255.31 Billion in 2022 and is
projected to reach USD 399.88 Billion by 2028 growing with CAGR of 7.76% from 2022 to
2028.
In 2022, the Indian air coolers market reached a valuation of USD 339.64 Million. It is
projected to witness a CAGR of 9.04% during the forecast period of 2023-2028, ultimately
reaching a market value of USD 1,625.52 Million by 2028.
The Indian washing machine market reached a value of USD 2,190.5 Million in 2022. It is
projected to exhibit a compound annual growth rate (CAGR) of 4.46% from 2023 to 2029,
reaching nearly USD 2,973 Million by 2029.
In 2022, the Indian microwave oven market was valued at USD 243.10 Million and is
expected to grow at a rate of 7.91% during the forecast period. By 2028, it is anticipated
to reach a market value of USD 376.37 Million.
The India smartphone market ended 2022 with 144 Million shipments, marking a 10% YoY
decline and the lowest level since 2019. Dwindling consumer demand persisted due to high
inflation, despite improvements in the supply situation. The average selling price (ASP)
reached a record high of USD 224, rising 18% YoY. The entry-level segment (sub-USD 150)
contracted to 46% of the market, down from 54% the previous year.
The lack of new launches in this segment hindered new smartphone users and limited
overall market growth.
The market size for laptops in India reached a value of more than USD 5.5 billion in
2022. The India laptop market is expected to grow at a CAGR of 6.7% between 2023 and 2028,
reaching a value of USD 8.1 billion by 2028.
(Source: IBEF, engineersgarage. com, finance.yahoo.com, maximizemarketresearch.com,
statista. com, researchandmarkets.com, technavio.com, expertmarketresearch. com, idc.com)
GROWTH DRIVERS
Rising urbanisation: In India, the urban population amounts to 461 Million people
in FY 2021-22. This number is growing by 2.3% each year. By 2031, 75% of Indias national
income is estimated to come from cities this is expected to fuel the growth of the
consumer electronics market by creating a larger customer base.
Rising disposable income: per capita income in india in India increased to ?
1,72,000 which contributes to a greater demand for consumer electronics.
Improved living standards: Indias GDP has the potential to exceed USD 7.5 trillion
by 2031, more than doubling its current value of USD 3.5 trillion. Over the same period,
Indias share of global exports could double and the Bombay Stock Exchange is expected to
achieve an annual growth rate of 11%, reaching a market capitalisation of USD 10 trillion
in the next decade which is anticipated to increase the consumer electronics market.
Changing lifestyles: The ndian middle class has experienced remarkable growth,
expanding from 14% in 2005 to 31% in 2021 and is projected to reach 63% by 2047. This
significant growth in the middle class population has resulted in a surge in disposable
income, which has emerged as the primary driver behind increased spending on household
appliances.
New categories of electronics: While traditional home appliances have remained in
demand consistently over the last decade, there has been a noticeable affinity towards
newly launched appliance categories like air purifier, whose market size is expected to
reach USD 565.7 Million by 2027, the revenue in dishwashing machines segment amounts to
USD 0.55 Billion in 2023. The market is expected to grow annually by 2.96% till 2028.
Rise of social and digital platforms for informed purchases: Modern advertisements
have undergone significant changes in recent years, as consumers increasingly prefer
subtle marketing approaches. Traditional advertisements solely focused on brand promotion
and offers are being disregarded by customers. Instead, brands that collaborate with
popular and relevant influences are gaining significant attention.
Easy credit accessibility: Bank loans for consumer electronics surged by 60% in FY
2021-22, rebounding from a 21% decline in the previous fiscal year. This growth was driven
by increased consumer confidence and the revival of economic activity to prepandemic
levels.
Decrease in raw material prices: The prices of consumer electronics raw materials
such as aluminum, copper, Steel and HDPE have corrected 16%, 5%, 11% andl3%, respectively
on a YoY basis. This will translate into greater affordability for consumer electronics
leading to demand growth.
Cheaper freight: The deflation in fuel prices have led to lower freight rates which
will attract greater shipment of electronics.
Higher ad-spend: Renowned consumer electronics brands are increasing their
ad-spends to attract more customers.
Increase discounts and offers: There will be greater offering of discounts and
attractive offers from consumer electronics brands which will translate into greater
sales.
Growing in R&D: There will be greater R&D investment by brands to come up
with new products to enhance their competitiveness in the market.
(Source: morganstanley.com, financialexpress.com, ICICI Securities)
COMPANY OVERVIEW
Incorporated in 1999, Aditya Vision Limited is a retail chain that specialises in
consumer electronics products. It is a modern multi-brand retail chain with over two
decades of industry experience and maintains a strong market presence in the states of
Bihar and Jharkhand. It has recently forayed into Uttar Pradesh where it has 8 operational
showrooms.
With a current presence through 117 outlets across nearly all districts of Bihar, major
districts of Jharkhand and few districts of eastern UP, the Company is aggressively
expanding in Hindi heartland of India.
Over the years, the Company has successfully established a niche brand offering more
than 10,000 products from leading multinational and domestic brands, which include digital
gadgets, entertainment solutions, home appliances, small appliances, kitchen appliances,
and personal care products.
The Company underwent its initial public offering in 2016 and became the first retailer
of consumer electronics in India to be listed on the Bombay Stock Exchange with a market
capitalisation of ? 1,860 Cr as on March 31, 2023.
RISK MANAGEMENT
The Board diligently employs risk management processes, reinforced by internal
controls, to ensure that the Company achieves its strategic objectives and remains
safeguarded against unforeseen circumstances.
At Aditya Vision, our focus is on becoming a sustainable business entity by
acknowledging potential risks and establishing robust risk management policies. The
effectiveness of our strategy directly correlates with the Companys ability to withstand
unforeseen incidents.
Consistency is a key aspect of our risk management approach, prioritising long-term
business sustainability over short-term profitability in our corporate strategy. This
ensures a clear understanding of feasible and non-feasible actions within our operational
framework, involving all stakeholders.
The Company confirms that there is an extensive risk management framework in place
including policy, procedures and evaluation methods to help the Company review
organisational risks. The thoroughness of the process has improved corporate
sustainability. Hence, risk management plays an important part of corporate management in
distant future.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has a strong internal audit system in place, which is regularly monitored
and updated to safeguard assets, comply with regulations and promptly address any issues.
The audit committee diligently reviews internal audit reports, takes corrective action as
required and maintains open communication with both statutory and internal auditors to
ensure the effectiveness of internal control systems. This robust internal audit framework
ensures that the Company operates with integrity, transparency and accountability, while
mitigating risks and safeguarding the interests of stakeholders.
HUMAN RESOURCES
The Company places great importance on its employees, considering them as its most
valuable asset. Its human resource policies and procedures are built on the principles of
integrity, enthusiasm, quickness, devotion and seamlessness. The Company focuses on
recruiting skilled individuals and provides performance-linked incentives and various
employee benefits. Extensive training and engagement programs are conducted to enhance
employee skills and foster a positive work environment.
Employee growth and development are encouraged and loyalty is rewarded. The Company
takes pride in maintaining a low attrition rate, reflecting its commitment to nurturing
and retaining its workforce.
CAUTIONARY STATEMENT
This statement made in this section describes the Companys objectives, projections,
expectation and estimations which may be forward looking statements within the meaning
of applicable securities laws and regulations. Forward- looking statements are based on
certain assumptions and expectations of future events. The Company cannot guarantee that
these assumptions and expectations are accurate or will be realised by the Company. Actual
result could differ materially from those expressed in the statement or implied due to the
influence of external factors which are beyond the control of the Company. The Company
assumes no responsibility to publicly amend, modify or revise any forward looking
statements on the basis of any subsequent developments.
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