<dhhead>MANAGEMENT DISCUSSION & ANALYSIS
REPORT</dhhead>
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.
However, 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 31.03.2022, the Company is having 122 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.
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 aspect 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.
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 down turn 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. 3675.66 lakhs during the year
under review as compared to Rs. 2924.18 lakhs last year, increased by 25.70%. The Gifts
segment contributed about 48.66% of the total turnover during the current year as compared
to 54.02% in the previous year.
The Greeting Cards sale was Rs. 873.39 lakhs during the year under
review as compared to Rs. 513.92 lakhs last year, increased by 69.95 %. The contribution
of greeting cards sales to the total turnover now stands at 11.56% as compared to 9.49% in
the previous year. The stationery items sale was Rs. 2591.56 Lakhs during the year under
review as compared to Rs. 1746.81 Lakhs during the Last Year, increased by 48.36%. The
contribution of Stationery items sales to the total turnover stands about 34.41% as
compared to 32.26% in the previous year.
Outlook
The Greeting Cards business during the year was again under pressure.
But the company is working on various strategies to counter the negative effects. 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
and Stationery segment. Company is continuously making effort to add more products to
perform better.
The stationary segment was increased by 48.36%. 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 7 Archies stores during the year and the total no of
Archies Stores opened by your Company in PAN India as on 31.03.2022 is 122.
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 company score
business.
Internal 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 Rs. 7718.57 Lakhs for
the financial year 2021-22 as compared to Rs.5529.33 Lakhs in the previous year increased
by 39.59%. The sale of gifts Segment was increased by 25.70%, Greeting Cards segment sale
was increased by 69.95% and Stationery segment were increased by 48.36% Inventory as on
31st March 2022 stands at Rs. 6,494.27 Lakhs, as against Rs. 5,794.67 Lakhs during
previous year. Debtors as on 31st March 2022 stand at Rs. 919.33 Lakhs as against Rs.
1042.04 Lakhs 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. All the employees of the Company continue to work as one cohesive Team
devoted to a common goal of spreading happiness and prosperity.
As at March 31,2022, the total employee strength of the Company stands
at 550.
Details of significant changes (i.e. change of 25% or more as compared
to the immediately previous financial year) in key financial ratios, along with detailed
explanations therefor.
| Sr. No Name of Ratio |
Current Financial Year Ratio |
Previous Financial Year Ratio |
Percentage of Change in Ratio |
Explanation therefore |
| 1 Debtors Turnover Ratio |
4.31 |
2.31 |
86.58% |
The variation is due to increase
in turnover. |
| 2 Inventory Turnover Ratio |
1.23 |
0.26 |
373.08% |
The variation is due to increase
in turnover. |
| 3 Interest Coverage Ratio |
0.29 |
0.46 |
-36.96% |
Ratio has shown a negative
impact due to low operating margin compares to previous year |
| 4 Current Ratio |
1.59 |
1.57 |
1.27% |
The variation is due to
increase in turnover. |
| 5 Debt Equity Ratio |
0.24 |
0.77 |
-68.83% |
Ratio has shown a negative
impact due to low operating margin compares to previous year |
| 6 Operating Profit Margin |
2.15 |
6.23 |
-65.49% |
Ratio has shown a negative
impact due to low operating margin compares to previous year |
| 7 Net Profit Margin |
-3.4 |
-4.30 |
-20.93% |
Ratio has shown a negative
impact due to low operating margin compares to previous year |
Details of any change in Return on Net Worth as compared to the
immediately previous financial year along with a detailed explanation thereof
| Sr. No Name of Ratio |
Current Financial Year
Ratio |
Previous Financial Year
Ratio |
Percentage of Change in
Ratio |
Explanation therefore |
| 1 Return on Net Worth |
-0.03 |
-0.03 |
NIL |
NO CHANGE |
Credit Rating
The Credit Rating Agency "ICRA Limited" has revised the long
term credit rating for Rs. 29.80 Crore bank lines of Archies Limited for line of credit
(LOC) from [ICRA] BB+ (Stable) to [ICRA] BB (Negative) on 31th March, 2022.
Total fees for all services paid by the listed entity and its
subsidiaries, on a consolidated basis, to the statutory auditor : Rs. 7,00,000/-
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