Pursuant to Regulation 34 (2)(e) of Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion
& Analysis Report for the year under review is given below:
Indian Economy
India continues to be among the fastest-growing economies in the world. Despite a
challenging external environment, the Indian economy registered healthy growth in FY 2022-
23. The real GDP grew by 7.2% in FY 2022-23 as against 9.1% in FY 2021-22 and reflects
Indias underlying economic resilience, relatively robust domestic consumption and lesser
dependence on global demand. The accelerated pace of economic reforms has led to the
sustainable growth of the Indian economy and strengthened its position in the world.
However, higher inflation remains a challenge and headline inflation increased to 6.7% in
FY 2022-23 from 5.5% in FY 2021-22. Following the gradual normalisation of global supply
chains, softening of global commodity prices, and successive hikes in the policy repo rate
by 250 basis points in FY 2022-23 by the Reserve Bank of India (RBI), the consumer price
index (CPI) inflation subsided to 4.25% (provisional) in May 2023 against 4.70% recorded
in April 2023. Further, 5.1% growth in the Index of Industrial Production (ITP) in FY
2022- 2023 and 12% Y-0-Y growth in the gross Goods and Services Tax (GST) revenue
collection of % 1.57 trillion in May 2023, present signs of optimism for the Indian
economy.
Despite the weak external demand, the merchandise exports contributed significantly to
economic growth in FY 2022-23. It was the highest-ever at US$ 447 46 billion with 6.03%
growth during FY 2022-23 surpassing the previous years record exports of US$ 422.00
billion. As per the Union Budget 2023-24, Indias export is expected to grow at 12.5% in
FY 2023-24, which will further boost the economy. The IMF projects the Indian economy to
advance steadily at 5.9% in FY 2023-24 before rising to 6.3% in FY 2024-25. The optimistic
growth stems from positive factors such as the rebound of private consumption, rapid
infrastructure development, improvement in capacity utilisation, increased production, and
revival in credit growth. Further, emphasis on capital expenditure with an allocation of 2
10 lakh crore in the Union Budget 2023-24 will significantly boost industrial
competitiveness, strengthen job creation and demand and provide a fillip to the growth
momentum.
CURRENT STATE OF THE ECONOMY
• Recovering from pandemic-induced contraction, Russian-Ukraine conflict and
inflation, the Indian economy is staging a broad-based recovery across sectors,
positioning to ascend to the pre-pandemic growth path in FY23.
• Indias GDP growth is expected to remain robust in FY24. GDP forecast for FY24
to be in the range of 6-6.8%
•. Private consumption in HI is the highest since FY15 and this has led to a boost
to production activity resulting in enhanced capacity utilisation across sectors.
• The Capital Expenditure of the Central Government and crowding in the private
Capex led by strengthening the balance sheets of the Corporates is one of the growth
drivers of the Indian economy in the current year
•. The credit growth to the MSME sector was over 30.6% on average during Jan-Nov
2022
•. Retail inflation is back within RBIs target range in November 2022.
• Indian Rupee performed well compared to other Emerging Market Economies in
Apr-Dec 2022.
• Direct Tax collections for the period April-November 2022 remain buoyant.
• Enhanced Employment generation seen in the declining urban unemployment rate and
in the faster net registration in Employee Provident Fund.
• Economic growth to be boosted by the expansion of public digital platforms and
measures to boost manufacturing output.
https://www.ibef org/economy/economic-survey-2022-23
Indias nominal gross domestic product (GDP) at current prices is estimated to be at
Rs. 232.15 trillion (US$ 3.12 trillion) in FY22. With more than 100 unicorns valued at US$
332.7 billion, India has the third-largest unicorn base in the world. The government is
also focusing on renewable sources to generate energy and is planning to achieve 40% of
its energy from non-fossil sources by 2030.
According to the McKinsey Global Institute, India needs to boost its rate of employment
growth and create 90 million non-farm jobs between 2023 and 2030 in order to increase
productivity and economic growth. The net employment rate needs to grow by 1.5% per annum
from 2023 to 2030 to achieve 8-8.5% GDP growth between 2023 and 2030. Indias current
account deficit (CAD), primarily driven by an increase in the trade deficit, stood at 2.1%
of GDP in the first quarter of FY 2022-23.
Exports fared remarkably well during the pandemic and aided recovery when all other
growth engines were losing steam in terms of their contribution to GDP. Going forward, the
contribution of merchandise exports may waver as several of Indias trade partners witness
an economic slowdown. According to Mr. Piyush Goyal, Minister of Commerce and Industry,
Consumer Affairs, Food and Public Distribution and Textiles, Indian exports are expected
to reach US$ 1 trillion by 2030.
https://www.ibef .org/economy/indian-economy-overview
Indian Bullion &Jewellery Industry
Introduction
As of February 2021, Indias gold and diamond trade contributed ~7.5% to Indias Gross
Domestic Product (GDP) and 14% to Indias total merchandise exports. The gems and
jewellery sector are likely to employ ~8.23 million persons by 2022, from ~5 million in
2020. Based on its potential for growth and value addition, the Government declared the
gems and jewellery sector as a focus area for export promotion.
The Government has undertaken various measures recently to promote investment and
upgrade technology and skills to promote ‘Brand India in the international market.
The Government has permitted 100% FDI in the sector under the automatic route, wherein the
foreign investor or the Indian company do not require any prior approval from the Reserve
Bank or the Government of India. The Indian Government also signed a Comprehensive
Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE) in March 2022,
this will allow the Indian Gems and Jewellery industry to further boost exports. CEPA will
provide the industry with duty-free access to the UAE market. Indias Gems Jewellery
Export Promotion Council (GJEPC) aims to triple its exports to the UAE post the CEPA.
The Government has permitted 100% FDI in the sector under the automatic route, wherein
the foreign investor or the Indian company do not require any prior approval from the
Reserve Bank or Government of India. The Government has made hallmarking mandatory for
gold jewellery and artefacts and a period of one year is provided for its implementation.
https://www.ibef org/industry/gems-jewellery-india
Market size
• Indias gems and jewellery market size was at US$ 78.50 billion in FY21. Growth
in exports is mainly due to revived import demand in the export market of the US and the
fulfilment of orders received by numerous Indian exhibitors during the Virtual
Buyer-Seller Meets (VBSMs) conducted by GIEPC.
• Indias gems and jewellery exports reached US$ 39.14 billion in 2021-22, a
54.13% rise from the previous year. From April-December 2022, Indias gems and
jewellery exports were at US$ 28.6 billion, a 6.28% rise compared to the previous years period..
While. the export during. April-March. 2023 stood at US$ 37.95 billion.
• The Government of India is aiming at US$ 70 billion in jewellery export in the
next five years (until 2025), up from US$ 35 billion in 2020.
• India has 10 special economic zones (SEZ) for gems & jewellery. These zones
have more than 500 manufacturing units, which contribute 30% to the countrys total
exports.
• As per Union Budget 2021, the Gem and Jewellery Export Promotion Council has
proposed a reduction in import duty on cut and polished diamonds to 2.5%, from the
existing 7.5%, in order to double exports of gems & jewellery to US$ 70 billion by
2025.
• Cumulative FDI inflows in diamond and gold ornaments in India stood at US$
1,201.56 million between April 2000-December 2021, according to Department for Promotion
of Industry and Internal Trade (DPIIT).
Investments/Developments
Cumulative FDI inflows in diamond and gold ornaments stood at US$ 1,213.06 million
between April 2000-March 2022, according to the Department for Promotion of Industry and
Internal Trade (DPIIT).
Some of the key developments in this industry are listed below:
• In February 2022, GJPEC organized a four-day Internal Jewellery Show Signature
2022, where 850 exhibitors participated and there were more than 400 internationals
visitors, buyers, and delegations from the US, UAE, Egypt, Nepal, Uzbekistan, and
Bangladesh.
• In September 2021, Malabar Group invested Rs. 750 crore (US$ 100 million) in a
gold refinery and jewellery unit in Hyderabad.
• India has signed an FTA with the UAE which will further boost exports and is
expected to reach the target of US$ 32 billion.
Government Initiatives
• The government has reduced import duty for Gold & Silver (from 12.5% to
7.5%) and Platinum & Pallidum (from 12.5% to 10%) to bring down the prices of precious
metals in the local market.
• Indian Government made hallmarking mandatory for Gold Jewellery and Artefacts.
• The Government has reduced custom duty on cut and polished diamond and colored
gemstones from 7.5% to 5% and NIL.
• Based on its potential for growth and value addition, the Government declared
gems and jewellery sector as a focus area for export promotion.
• The Government has undertaken various measures recently to promote investment
and upgrade technology and skills to promote ‘Brand India in the international
market. R The Government has permitted 100% FDI in the sector under the automatic route,
wherein the foreign investor or the Indian company do not require any prior approval from
the Reserve Bank or Government of India.
• Revised SEZ Act is also expected to boost gems and jewellery exports.
Financial Performance
The current year was a not good year for your Company. The Company is trading in
textile, plastic products, precious metal and stones and related products. The Company has
managed to maintain a growth trajectory in its financial performance in the current
financial year. Further, the Management expects a good financial performance in the new
business in the next financial years.
The Total Income for the financial year under review increased to Rs.415.70 Lakhs
against Rs. 406.88 Lakhs during previous year whereas the Profit after Tax generated by
the company during the year under review is Rs. 2.09 Lakhs as compared to Rs. 2.43 Lakhs
during the previous year. The company is working hard to increase the profitability in the
forthcoming years
Key Financial Ratio:
The key financial ratios are as under:
| Particulars |
FY 2022-23 |
FY 2021-22 |
| EBITDA Margin |
0.87% |
0.90% |
| PBT Margin |
0.67% |
0.80% |
| PAT Margin |
0.50% |
0.60% |
| RONW |
-11.49% |
0.43% |
D/E |
Not Applicable since there is no debt |
Not Applicable since there is no debt |
| Debtor Turnover Ratio |
1.66 |
3.07 |
Opportunities and Threats
We believe that the factors which contribute to our strengths are our ability to adapt
to the ever changing environment, maintaining continuous growth, creating new market
opportunities, efficient leadership qualities and maintaining good customer relationship.
The company is doing business of trading and importing in toys, plastic and related
products, textile and trading of precious stones & metal which is as per the objects
of the company. The management is hopeful of expanding its business.
There is a huge opportunity to move the gold and Jewellery business from unorganized to
organized space in many countries including India and China. The organized segment has
tremendous growth prospects. Growing consciousness of branded jewellery, increasing
purchasing power in the Tier I & IT locations, and increasing demand for diamond
jewellery are major opportunities for the next 10 to 15 years. The major threat could be
changes in government policy with regard to import and export of gold products.
Risk & Concern
The Board of Directors have framed and regularly implement and monitor risk management
plan of Company. Major risk identified by the business and function are systematically
addressed through mitigating actions on a continuing basis.
The Company has successfully been in gold business for many years and has developed
systems to mitigate most of the perceivable risks. The Company has ambitious expansion
plans to increase its profitability, these plans require large scale and meticulous
execution capabilities. Even though the company has planned its execution strategy, there
would always be a concern and risk of execution.
Segment-wise Performance:
The company has three reportable business segments i.e. Textile Products, Precious
Metal & Stones and Plastic & related products.
(Amount Rs in Lakhs)
| Particulars |
FY 2022-23 |
FY 2021-22 |
| Segment Revenue |
|
|
| a) Textiles Products |
0.00 |
0.00 |
| b) Plastic Products |
0.98 |
4.09 |
| c) Precious Metal & Stones |
414.72 |
402.78 |
| Total |
415.70 |
406.87 |
Internal control systems and their adequacy
Adequate internal controls, system and checks are in place commensurate with the size
of the Company and nature of its business. The Company has a well-placed, proper and
adequate internal financial control system which ensures that all assets are safeguarded
and protected and that the transactions are authorized recorded and reported correctly.
The Board reviews the effectiveness of controls documented as a part of internal
financial control framework and take necessary corrective and preventive actions wherever
weaknesses are identified as a result of such reviews. This review covers entity level
controls, process level controls, fraud risk controls and Information Technology
environment.
Material developments in Human Resources / Industrial Relations front, including number
of people emploved.
The companys objective is to create an inspirational work climate where talented
employees engaged in creating sustained value for the stakeholders. There is no material
development in Human Resources / Industrial Relations front except those mentioned in the
directors report. Total No. of employees appointed in the company are 5.
Cautionary Statement
Statements in the Management discussion and analysis, describing the Companys
objectives, outlook, opportunities and expectations may constitute “Forward Looking
Statements” within the meaning of applicable laws and regulations. The actual result
may vary materially from those expressed or implied in the statement. Several factors make
a significant difference to the companys operations including the government regulations,
taxation and economic scenario affecting demand and supply condition and other such
factors over which the Company does not have any direct control.
Code of Conduct
As prescribed under Regulation 34(3) of SEBI (LODR) Regulations 20153, a declaration
signed by the Whole time Director and Chief Financial Officer affirming compliance with
the Code of Conduct by the Directors and Senior Management Personnel of the Company for
the financial year 2022-23 forms part of the Corporate Governance Report.
|
For Arman Holdings Limited |
|
Deepak Kumar Babel |
|
Sd/ |
| Place: Surat |
Managing Director |
| Date: May 30, 2023 |
DIN : 05200110 |
+91-9892691696
