Today's Top Gainer
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MANAGEMENT DISCUSSION & ANALYSIS REPORT
Your company is engaged in selling home textiles in domestic Indian market under its brand name "Bella Casa". The brand is well known for its innovative and original designs, good quality & affordable prices. The brand is endorsed by famous Bollywood celebrity Jacqueline Fernandez. The company has a co-branding arrangement with Disney Marvel for its kids offerings. Legendary super heroes & characters like Mickey & Minnie, Spiderman, Captain America are part of its kids collection. The company also has a similar arrangement with Hallmark Design Collection for its premium offerings. The complete focus is on increasing the distribution of the brand to all nooks and corners of the country. Currently the products area viable though 1000+outlets and the target is to add another 4000+outlets to its fold in next 2 years.
Your company also has a thriving women ethnic wear fashion business where the installed capacity of the company now stands at 5 mn pcs/year. These products are sold mainly to large retail chains of India like Reliance Retail, FBB & Pantaloons.
India ranks seventh in the world in terms of nominal GDP and is the third largest economy in the world in PPP terms. It is estimated that India will be in the top five global economies by Fiscal 2020 and in the top three by Fiscal 2050. Indias Gross Domestic Product ("GDP") in Fiscal 2017 stands at approximately US$ 2,464 billion and is projected to reach US$ 3,555 billion, in nominal terms, by Fiscal 2020. With a projected real GDP growth of 7% to 8% till Fiscal 2020, India is now among the fastest growing major economies in the world. The growth is driven by growth in private consumption, favourable demographics, improving dependency ratio, rising education levels and steady urbanization.
Globally, India is seen as one of the key consumer markets from where future growth is likely to emerge. The growth in consumption will be driven by both services and private consumption. Key sectors that will drive this growth in private consumption are retail, food services, consumer goods, healthcare, education, entertainment. Private consumption is estimated at 59% ofGDP for Fiscal 2017, and is expected to continue to be the main driver of growth, growing at a robust Compound Annual Growth Rate ("CAGR") of approximately 11 % between Fiscals 2017 and 2025. It is estimated that Indias private consumption expenditure will increase from US$ 1,453 billion in Fiscal 2017 to US$ 2,062 billion by Fiscal 2020 and will surpass the private consumption expenditure of developed economies like Italy, France and UK.
The retail market in India accounts for 49% of private consumption in Fiscal 2017 and is expected to be 48% in Fiscal 2021. Though the share seems to decrease in percentage terms, it is expected to grow in absolute terms, from US$ 710 billion in Fiscal 2017 to US$ 990 billion by Fiscal 2020, at a CAGR of approximately 12%. The share of organized brick
and mortar retail in Fiscal 2017is US$ 66.7 billion and is expected to increase to US$ 119 billion by Fiscal 2020, representing a CAGR of 21%.While organized retail, primarily brick and mortar, has been in India for two decades now, its contribution to total retail is low at 9% (approximately US$ 67 billion) in Fiscal 2017 and is expected to grow to 21% (approximately US$ 252 billion) by Fiscal 2025.
As of Fiscal 2017, the food and grocery category formsa majority of the retail market at 67% and is expected to maintain its position as the dominant contributor in the retail market for the next eight years, accumulating approximately a 65% share in the market by Fiscal 2025. Decline in share of the food and grocery category always favours a rising share of discretionary retail, and apparel and accessories is a primary discretionary category in the Indian retailing basket. The apparel and accessories category formed 8% of the overall retail segment and was the second largest retail category in Fiscal 2017. It is likely to remain one of the top three categories in retail in Fiscal 2020 and Fiscal 2025.
The following table sets forth the share of various categories in the overall retail market:
|Type of Categories||Categories||Fiscal 2007||Fiscal 2012||Fiscal 2017||Fiscal 2021||Fiscal 2025|
|Total Retail (US$ Billion)||259||398||710||1106||1577|
|Need based||Food and Grocery||70%||67.5%||66.7%||65.8%||65%|
|Primary Discretionary||Apparel and Accessories||8%||8.3%||7.9%||7.7%||7.6%|
|Jewellery and Watches||6%||7.3%||7.7%||8.2%||8.5%|
|Other Discretionary||Home and Living||2%||4.2%||4.3%||4.4%||4.4%|
|Pharmacy and Wellness||2%||2.8%||2.9%||3.0%||3.1%|
Notes: 1 US$ = ? 65.1) Accessories includes Bags, Belts, and Wallets 2) Others include Books and Stationery, Toys, Eye apparel, Sports Goods, Alcoholic Beverages and Tobacco. (Source: Technopak)
Indian Home Textile Market
India represents 3rd largest market share in Asia-Pacific home textiles market.
Home textiles spending in India is estimated at $3.7 bn in 2014 and is expected to grow fastest in world at CAGR of 7.2% between 2015 & 2020 to reach $5.6 bn by 2020.
Bed Linen & Bed Spread
accounted for 58.1% of the Indian home textiles market worth $2.1 billion in 2014 and is expected to witness highest growth between 2015 and 2020 to reach $3.3 billion growing at a CAGR of 7.4% during the period.
Bath / Toilet Linen
which represented 2nd largest market share is expected to follow bed linen & bed spread in terms of growth rate and is set to register a CAGR of 6.9% during the period of study to reach $ 0.9 billion by 2020.
During FY 2017-18, despite challenging business environment your Companys total sales registered a growth of 10.11%, Net Revenue being 12703.23 Lacs in FY 2018 as against 11502.86 Lacs in FY 2017.
The Companys policy is to actively manage its foreign exchange risk within the framework laid down by the Companys forex policy approved by the Board. Given the interest rate fluctuations, the Company has adopted a prudent and conservative risk mitigation strategy to minimize interest costs.
Commodity Price Risks
Volatility in prices of raw materials, energy inputs and finished goods may adversely impact profitability. The Company proactively manages these risks through forward booking, inventory management and proactive vendor development practices. The Companys reputation for quality, product differentiation and service, coupled with existence of powerful brand image with robust marketing network mitigates the impact of price risk on finished goods.
Interest Rate Risk
Any increase in interest rate can affect the finance cost. The Company is mitigating these risks through Continuous monitoring of interest rate trends.
The Company is exposed to risks attached to various statutes and regulations. The Company is mitigating these risks through regular review of legal compliances carried out through internal as well as external compliance audits.
Human Resources Risk
Your Companys ability to deliver value is dependent on its ability to attract, retain and nurture talent. Attrition and non-availability of the required talent resources can affect the performance of the Company. The Company is mitigating these risks by Continuous benchmarking of the best HR practices across the industry and carrying out necessary improvements to attract and retain the best talent and Regular review, monitoring and engagement on personal development plans of high performers and high potential employees.
The outlook for the Indian textile industry continues to be positive. The factors which contribute to the India advantage are expected to continue over the medium term. This is expected to help India enhance its market share further in the other key geographies.
Your Company has in place internal control systems and procedures commensurate with the size and nature of its operations. Internal control processes which consist of adopting appropriate management systems and implementing them are followed. These are aimed at giving the Audit Committee a reasonable assurance on the reliability offinancial reporting and statutory & regulatory compliances, effectiveness and efficiency ofyour Companys operations. The Internal Control Systems are reviewed periodically and revised to keep in tune with the changing business environment.
The Company recorded total revenue of Rs.1,27,03,23,531 during the year under review as against Rs.1,150,286,493 in the previous year thereby registering growth of 10.44%. The profit after tax for the year ended 31st March, 2018 is Rs.6,00,56,626 as against Rs.3,26,80,205 in the previous year showing growth of 83.77%.
Including Number Of People Employed
The Company firmly believes that motivated and empowered employees are the cornerstone of competitive advantage. The Companys employee value proposition is based on a strong focus on employee development, providing a satisfying work environment, performance appraisal and counseling and appropriate empowerment. The Company continues to maintain and enjoy a cordial relationship with its employees, providing positive environment to improve efficiency with regular investments in upgrading the knowledge and skills of the employees
* Further widening of our customer base
With the growing opportunities available in the market, we will endeavour to continue to grow our business by adding new customers in existing and new geographies, new market segments. We are looking towards expanding customer base in Middle East countries. We are also making efforts and diagnosing the domestic markets for our own brands product. With the widening of the customer base for our own Brand product we can leverage the production capacity and the experience of our production team. We aim to do this by effectively leveraging our marketing skills and relationships and focusing on total customer orientation.
* Reduction of operational costs and achieving efficiency
Apart from expanding business and revenues we have to look for areas to reduce costs and achieve efficiencies in order to remain a cost competitive company. We try to reduce the wastages and control the production on the production floor through effective supervision. Our focus has Ideen to reduce the operational costs to gain competitive edge.
* To build-up a professional organization
We believe in transparency, commitment and coordination in our work, with our suppliers, customers, government authorities, banks, financial institutions etc. We have a blend of the experience and the sufficient staff for taking care of our day to day operations. We also consult with external agencies on a case to case basis on technical and financial aspects of our business. We wish to make it more sound and strong in times to come.
* Focus on cordial relationship with our Suppliers, Customer and employees
We believe that developing and maintaining long term sustainable relationships with our suppliers, customers and employees will help us in achieving the organizational goals, increasing sales and entering into new markets.
* Optimal Utilization of Resources
Our Company constantly endeavors to improve our production process, skill up-gradation of workers, modernization of machineries to optimize the utilization of resources. We analyze our existing raw material procurement policy and manufacturing processes to identify the areas of bottlenecks and take corrective measure wherever possible. This helps us in improving efficiency and putting resources to optimal use.
* Cutionary Statement
The statements in the "Management Discussion and Analysis Report" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.
For and on the behalf of the Board of Directors
|Harish Kumar Gupta|
|Date: 06.08.2018||Chairman & Whole- Time Director|
|Place: Jaipur||DIN: 01323944|