This section shall include discussion on the following matters within the limits set by
the listed entitys competitive position:
1. Industry structure and developments.
2. Opportunities and Threats.
3. Segment–wise or product-wise performance.
4. Outlook
5. Risks and Concerns
6. Internal control systems and their adequacy
7. Discussion on financial performance with respect to operational performance.
8. Material developments in Human Resources / Industrial Relations front, including
number of people employed.
9. 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, including: i. Debtors Turnover ii. Inventory Turnover iii. Interest
Coverage Ratio iv. Current Ratio v. Debt Equity Ratio vi. Operating Profit Margin (%) vii.
Net Profit Margin (%) or sector-specific equivalent ratios, as applicable.
10. Details of any change in Return on Net Worth as compared to the immediately
previous financial year along with a detailed explanation thereof.
This Report contains forward-looking statements that involve risks and uncertainties.
The Company undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise. Actual
results, performances or achievements could differ materially from those expressed or
implied in such forward-looking statements. This report should be read in conjunction with
the included financial statements and the notes.
Industry Structure and Developments
Global Economic
The year 2022 began with cautious optimism as the lingering effects of the Covid-19
pandemic continued to subside. However, the global economy still had to struggle with
several headwinds in the form of increasing inflation, geopolitical tensions,
Russia-Ukraine conflict and a tightening monetary policy. To control the inflationary
pressure, central banks of various countries increased the interest rate, which impacted
the bond market. Major international banks faced the heat from the tightened monetary
policy, as it placed them on a shaky ground, further deteriorating their performance,
including the collapse of Silicon Valley Bank. Moreover, the anticipated growth rate has
also contracted from 3.4% in 2022 to 2.8% in 2023 because of these events. Central banks
of a host of countries have launched a robust fight against rising inflation. The fight is
starting to pay off, but central banks must continue their efforts. As a result of a
weaker global demand and the implementation of tighter monetary policies, global inflation
is anticipated to decrease from an average of 8.7% in 2022 to 7.0% in 2023. Despite
efforts to control inflation, core inflation rates persistently remain high in most
regions. The combination of supply chain bottlenecks, generous Government spending, tight
labour markets and a commodity shock – triggered by the Russian invasion of Ukraine
– have together contributed to this trend. The persistent volatility around high
inflation, rising recession risks and monetary policy uncertainty has led to significant
fluctuations in financial markets. However, both inflation and core inflation are showing
signs of improvement as a result of concerted efforts.
Outlook
Despite challenges faced, the world economy is projected to grow at 3.0% in 2024.
Advanced economies is anticipated to grow from 1.3% in 2023 to 1.4% in 2024. Conversely,
emerging market and developing economies are projected to have more promising economic
prospects, with an average growth rate predicted at 3.9% in 2023 and an anticipated
increase to 4.2% in 2024. In order to balance the goals of boosting economic output and
controlling inflation, macroeconomic policies to be thoughtfully calibrated. Effective
coordination between monetary and fiscal policies is projected to mitigate the potential
of an extended and severe economic downturn. It is in the best interest of all the
countries to engage in stronger international collaboration to mobilise resources and
avoid further disruptions
Indian Economy
The year 2022-23 witnessed India maintaining a steady trajectory of economic recovery,
continued from 2021-22. The resilience of Indian economy owes it to a host of factors,
including the widespread administration of the Covid-19 pandemic vaccinations. Moreover,
an optimistic business environment and robust industrial output have provided strong
momentum for the growth of Indias economy. The manufacturing Purchasing Managers Index
(PMI), compiled by S&P Global rose to 57.8 in December 2022 from 55.7 in November
2022. The PMI average for the third quarter of the fiscal stood at 56.3. The fourth
quarter PMI averaged to 58.7 rising to a 31 month high. Several indicators including total
GST collections, digital transaction volume, electricity demand, rail & air passenger
and freight traffic, petroleum product consumption, and coal production have pointed
towards a positive recovery trajectory. Private consumption has rebounded, and overtaken
export stimuli as the primary growth driver. This increase in private consumption has
further augmented production activity, resulting in higher capacity utilisation across
various sectors.
These combined factors have resulted in growth in GDP to 7.2% in FY 2022-23,
positioning India as one of the fastest growing economies globally. The country is
well-placed to weather global spillovers compared to other emerging markets.
Indias economy is well-positioned to weather global spillovers compared to other
emerging markets. This is partly due to the countrys sizeable domestic market and a
steady increase in the capital expenditure of the Government. This has also contributed to
an increase in employment. The ‘Mahatma Gandhi National Rural Employment Guarantee
Scheme (MGNREGS) has been instrumental in generating employment opportunities directly in
rural areas, while also creating avenues for rural households to diversify their income
streams. Despite food scarcity across the globe, initiatives such as ‘PM-Kisan and
‘PM Garib Kalyan Yojana have played a crucial role in ensuring food security in the
country and helping the Indian economy to remain immune to these challenges.
Outlook
The outlook for India continues to remain bright, with an investment boom sparking
sharp increases in factory output, bank lending and consumer purchases. Moreover, this
economic expansion is anticipated to boost business confidence and serve as a catalyst for
increased private sector investment. The resultant optimism and enthusiasm among investors
are further set to fuel the growth of the Indian economy
Indian Consumer Durable Industry
In India, there is a rising demand for various consumer durable goods due to increasing
disposable income and technological advancements. As a result, there is intense
competition among the numerous consumer durable brands, present in the country.
Multinational organisations recognise the immense potential for growth and development in
India and therefore view it as a critical market to prioritise. As per a report by CRISIL
Research, the consumer durables industry was valued at Rs. 2.4 Trillion in 2021. Out of
this, mobile phones & PCs accounted for the largest share, to the tune of Rs. 1.5
Trillion, whereas large household appliances and other small appliances comprising the
rest of the share. This indicates that India is a promising destination for short-term to
medium-term expansion of consumer electronics expenditure worldwide. Consumer electronics
market in India has attracted several significant investments in the form of FDI inflows
and merger & acquisition by major players in the international market. The approval of
the ‘Electronic Development Fund Policy under the ‘Make in India initiative
aims to streamline a convoluted duty structure. Alongside this, the ‘Modified Special
Incentive Package Scheme (M-SIPS) has been implemented to offer a subsidy of
approximately 15% to 20% for CAPEX. This will encourage increased investment by consumer
electronics manufacturers in production, distribution and research & development
activities in the coming years. Furthermore, ‘Scheme for Promotion of Manufacturing
of Electronic Components and Semiconductors (SPECS 2022), initiated by the Government of
India, aims to strengthen the manufacturing ecosystem for electronic components and
semiconductors in the country.
Major Growth Drivers
Rising Disposable Income
With the growing middle-class and rising disposable incomes, consumers are willing to
spend more on electronic goods, including smartphones, laptops and home appliances.
Increasing Penetration of the Internet
The increasing penetration of the internet in India has led to a surge in online
shopping, making it easier for consumers to purchase electronic goods from the comfort of
their homes.
Government Policies
The Indian Government has implemented various policies to promote electronics
manufacturing and increase foreign investment in the sector, which has led to a surge in
demand for electronic goods in the country.
Technological Advancements
Rapid advancements in technology have led to the launch of new and innovative
electronic products, such as smart home devices, wearables and virtual reality headsets,
which have contributed to the growth of the electronics retail industry.
Urbanisation
The increasing urbanisation of India has led to a rise in demand for electronic goods
as consumers in urban areas tend to have higher disposable incomes and a greater
willingness to adopt new technologies.
Competitive Pricing
With the growing middle-class and rising disposable incomes, consumers are willing to
spend more on electronic goods, including smartphones, laptops and home appliances.
Growing E-Commerce Industry
The growth of the e-commerce industry in India has led to a surge in demand for
electronic goods as consumers can purchase them easily through online platforms.
Segment-Wise or Product-Wise Performance
Over the last few years, as a growth oriented company we have focused on diversifying
into other consumer electronics products as we see a long run way for growth in sales of
these products. This has helped us to only emerge as a multi-product brand but has also
grow our profitability margins.
With an ambitious growth spree, the company has increased the number of multi product
stores to 46 in 2023. This means that now 46 stores under our name sell electronic
appliances such as Television, Refrigerator, Air Conditioners, Air Coolers, Washing
Machines, and Microwaves, though our prime business still remains retail and wholesale
distribution of mobile handsets, tablets, data cards and mobile accessories. Besides this,
the conversion rate is at a whopping 98%.
Segment/ Product |
Number of Stores |
Total Stores |
172 |
Owned Retail Stores |
163 |
Franchised Stores |
9 |
The total revenue of the company stood at INR 34474.43 Lac which was INR
25175.69 Lac in previous year. The company now owns a total of 172 store, out of which
163 are owned stores and 9 are franchised.
Outlook
Our Company over the last year has heavily invested time and efforts in diversifying
the products sold through our stores and the result is that we have increased the total
number of Multi Product stores. The stores of our company has been spread over the Gujarat
covering almost every area even the rural and the remote areas. Also, the company has set
its footing in Maharashtra this year. Our decision to invest in this growth spree roots
from the fact that we are bullish on the demand of various consumer electronic items as
the work from home culture spreads.
Risks and Concerns
Supply chain disruptions, mobilizing workforce and keeping up with demand poses a risk,
as we expect a dramatic increase in demand when various companies release their 5G phones
in India.
Many phone manufacturers offering lucrative offers and early-access deals directly to
the consumer through its B2C channels can become difficult to compete with.
Rapidly increasing in the technology trends, less life line of the products, outdated
ratio increases rapidly.
The continued maintenance and improvement of BHATIAs brand recognition and reputation
are crucial to its future success. Failure to do so may impede the ability to maintain and
expand its consumer base, leading to negative impacts on business operations, financial
condition, cash flows, and results of operations.
Internal Control Systems and Their Adequacy
The Company has in place an adequate system of internal control commensurate with its
size and nature of its business. These have been designed to provide reasonable assurance
that all assets are safeguarded and protected against loss from unauthorized use or
disposition and that all transactions are authorized, recorded and reported correctly and
the business operations are conducted as per the described policies and procedures of the
Company. The Audit Committee and the Management have reviewed the adequacy of the internal
control systems and suitable steps are taken to improve the same
Discussion on Financial Performance with respect to Operational Performance
In FY2023, the companys revenue from operations grew to INR 34,474 Lac, an increase of
37% from FY 2022.
The company managed to maintain its strong profitability due to a strong foundation and
loyal consumer base. The company with better inventory management, diversified product
portfolio, improving conversion rate and new multi-product outlets, realized economies of
scale i.e., the company was able to increase its sales without much increase in input
costs.
Debtors Turnover Ratio is an accounting measure used to measure how effective a
company is in extending credit as well as collecting debts. The companys collection of
account receivables has been efficient over the years, as it caters to the B2C segment.
Inventorys turnover Ratio indicates the rate at which a company sells and replaces
its stock of goods during a particular period. The companys higher Inventory Turnover
ratio indicates the companys efficiency to convert its inventory quickly into Sales.
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