Archies Ltd Management Discussions.
This report contains statements that the Companys beliefs may be considered to be "Forward Looking Statements" that describe our objective, plans or goals. All these forward looking statements are subject to certain risks and uncertainties, including, but not limited to, government action, local & global, political or economic developments, changes in legislation, technology risks, risk inherent in the Companys growth strategy, dependence on certain suppliers and other factors that could cause our actual results to differ materially from those contemplated by the relevant forward looking statements.
These forward looking statements included in this report are made only as on the date of this report and we undertake no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances.
Industry Structure and Development
The Social Expressions Industry is still unorganized in India. There are number of small players whose operations are restricted in their respective regions. Besides them, there are very few serious players having nationwide presence. Greeting Cards are more of a fashion than culture in India and the Industry is driven by retailers and distributors rather than consumers.
The Company, which pioneered the concept in the Indian market, is the leader with more than 50% share of the organized sector.
Technology in the form of e-greeting, SMS and applications like facebook, Whatsapp had its toll on the growth of the greeting card business in general. Flowever, this segment has the potential to bounce back. The Company has developed into a gifting solution destination for the consumers and has enhanced its reach to come near to the Customers, with opening of retail outlets in various cities in India. As on 31.03.2018 the Company is having 217 company owned and operated retail outlets and is planning to open more stores.
This business is based on sentiments both at micro and macro level. There is visible growth across all sectors of the economy, which bodies very well for the resources sector. We are encouraged by reforms including to the Goods and Services Tax (GST) implemented in the Country, which would have the positive impact on the functioning of the Company and Economy as a whole. These are all transformative steps, designed to strengthen the country from within and unleash its full economic potential.
Opportunities and Threats
Your Company has decided to reorient its business strategy by shifting its focus on other verticals such as online platform and alternate selling channel for its Stationery Products. Having said that your Company will continue to consolidate its Pan-India footprint. The Company is now more focused towards sales optimization by creating value proposition for consumer.
As realty sector continues to be under stress and organized retailing is mushrooming in different parts of the country; your Companys constant endeavor is to tap most of the locations for deeper penetration. Additionally, your Company will continue to explore overseas markets that offer vast opportunities.
The technological evolution has brought us todays well known, e-Commerce. This catalyst of online trading has offered a great help to the online marketing industry and has changed the face of purchasing products and services. With the great help and lucrative abilities of e-Commerce it is known as one of the most important aspects of the internet to emerge and will continue its progress in the future. The benefits of e-Commerce like its around-the-clock availability, the wide opportunity of your products to customers, the speed and easy accessibility, plus the international reach will be on your hands.
Considering the current scenario Your Company has tied up with new affiliates like Paytm, Talash.com and one major ecommerce portal, "Amazon.in" for expansion on market place to wider their reach. As you all are aware that Amazon is a big market place and day by day we are getting a good presence over there. Remember that e-Commerce is faster, cheaper, and more convenient than the traditional methods of selling products now days. Your company will be able to operate your products marketing and your products selling online. Company is not only focusing on selling the gifting products but also the home decor products through E-commerce channel. Through E commerce channels your company is trying to achieve a new level where they are targeting a 12% of Business in the year 2018-19.
Your Company understands that the business model that would run in future is by creating customer satisfaction and value creation for ensuring profitability and sustainability. Your Company is constantly endeavor is to serve the consumer better, faster and at less cost in ever changing environment.
Risks and Concerns
Macro-economic factors like a downturn in the economy, exchange rate fluctuation and, natural calamities are likely to affect the business industry at large and we are not untouched. Change in Governments fiscal policy also has a bearing on our performance. Large prevalence of unorganized players is another area of concern. High rental and shrinking store size is emerging as areas of concern. Change in fashion trends and consumer preference adversely affects the turnover of the Company. Intensifying competition in gifting segment also pose a probable risk to the Company.
Product Wise Performance
The Turnover of the gift segment was Rs. 10434.92 lacs during the year under review as compared to Rs. 12257.42 lacs last year, down by 14.87%. The Gifts segment contributed about 66.70% of the total turnover during the current year as compared to 66.40% in the previous year.
The Greeting Cards sale was Rs. 2742.43 lacs during the year under review as compared to Rs. 3340.87 lacs last year, down by 17.91%. The contribution of greeting cards sales to the total turnover now stands at 17.53% as compared to 18.10% in the previous year.
The stationery items sale was Rs 2333.67 Lacs during the year under review as compared to Rs 2703.88 Lacs during the Last Year, down by 13.69%. The contribution of Stationery items sales to the total turnover stands about 14.92% as compared to 14.65% in the previous year.
The Greeting Cards business during the year was again under pressure. But the company is working on various strategies to counter the negative effects. With tie up with Hallmark, we are quite confident that greeting cards business should show positive signs in the coming years.
The turnover of the gift segment has been higher than the Greeting card segment. But during the year under review the Gift segment was down by 14.87 %.
The stationary segment has down by 13.69%. We are hopeful that this segment is going to perform better.
The companys efforts to open company owned / managed stores will continue in the upcoming shopping malls and High Streets across the country on selective basis. Your company has opened 18 Archies stores during the year and the total no of Archies Stores opened by your Company PAN India as on 31.03.2018 is 217.
The main concentration is on the core business of greeting cards, gifts and retail, and every effort of the Company is aimed at maximizing the profitability of the company by introducing new products and ideas which gel with the companys core business.
Internal Financial Control Systems and their Adequacy
The Company has adequate Internal Control systems for business processes including components, packing material, trading goods, plants and machinery, equipment and other assets and with regard to the sale of goods. The internal control system is supplemented by an extensive internal audit, which is conducted by independent firm of Chartered Accountants. Internal audits are undertaken on a continuous basis covering various areas across the chain like manufacturing, operation, sales and distribution, marketing and value finance etc in all the branches of the Company. The Management and Audit Committee regularly review reports of the internal auditors, and corrective action initiated to strengthen the controls and enhance the effectiveness of the existing systems.
Financial performance with respect to operating performance
The Company recorded Revenue from Operations of ? 15782.07 Lacs for the financial year 2017-18 as compared to ? 18626.10 Lacs in the previous year down by 15.27 %. The sale of gifts Segment was down by around by 14.87%, Greeting Cards segment sale was down by 17.91 % and Stationery segment were down by 13.69%.
Inventory as on 31st March 2018 stands at ? 5,177.57 Lacs, as against f 5,687.48 Lacs during previous year.
Debtors as on 31st March 2018 stand at ?2199.17 Lacs as against ?1995.67 Lacs during the previous year.
Human Resources / Industrial Relations
Industrial relations at Archies have always been cordial. This is because all employees, managers and workmen have always lived in the value of teamwork and belongingness. As in the earlier years the Industrial Relations continued to be cordial and amicable. Al I the em ployees of the Company continue to work as one cohesive Team devoted to a common goal of spreading happiness and prosperity.
As at March 31,2018 the total employee strength of the Company stands at 1245.