Bloom Dekor Ltd Management Discussions.


Indian economic overview

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships.

Market size

Indias GDP is estimated to have increased 7.2 per cent in 2017-18 and 7 per cent in 2018-19. India has retained its position as the third largest startup base in the world with over 4,750 technology start-ups.

Indias labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

Indias foreign exchange reserves were US$ 405.64 billion in the week up to March 15, 2019, according to data from the RBI.

Government Initiatives

The interim Union Budget for 2019-20 was announced by Mr Piyush Goyal, Union Minister for Finance, Corporate Affairs, Railways and Coal, Government of India, in Parliament on February 01, 2019. It focuses on supporting the needy farmers, economically less privileged, workers in the unorganised sector and salaried employees, while continuing the Government of Indias push towards better physical and social infrastructure.

Total expenditure for 2019-20 is budgeted at Rs 2,784,200 crore (US$ 391.53 billion), an increase of 13.30 per cent from 2018-19 (revised estimates).

Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25 per cent of the GDP from the current 17 per cent. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

Some of the recent initiatives and developments undertaken by the government are listed below:

• In February 2019, the Government of India approved the National Policy on Software Products 2019, to develop the country as a software hub.

• The National Mineral Policy 2019, National Electronics Policy 2019 and Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME II) have also been approved by the Government of India in 2019.

• Village electrification in India was completed in April 2018. Universal household electrification is expected to be achieved by March 2019 end.

• The Government of India released the maiden Agriculture Export Policy, 2018 which seeks to double agricultural exports from the country to US$ 60 billion by 2022.

• Around 1.29 million houses have been constructed up to December 24, 2018, under Government of Indias housing scheme named Pradhan Mantri Awas Yojana (Urban).

• Prime Ministers Employment Generation Programme (PMEGP) will be continued with an outlay of Rs 5,500 crore (US$ 755.36 million) for three years from 2017-18 to 2019-20, according to the Cabinet Committee on Economic Affairs (CCEA).

Indian Door Market

The market for doors is slowly but steadily inclining towards better quality factory finished products as against the orthodox traditional ways of making wooden decorative door sets at site. Thanks to changes in policies by RERA (Real Estate Regulatory Authority), developers have now started investing in better quality of products as well as partnering with more organized suppliers in view of guaranteeing their customers a minimum 5-year defect liability period. Moreover, with newer entrants in the organized space, awareness and knowledge of better-quality doors is helping the entire organized pool of manufacturers increase their market share.

Fire safety has become a growing concern in todays markets with media covering more and more such events and thus bringing the importance of fire rated doors to the industry. The western developed markets are compelled to treat fire safety as non-negotiable and fire rated doors to the tune of 30 mins and 60 mins in each residential / institutional building have become a necessity. This trend is slowly catching up in India with Maharashtra leading in spreading such awareness where entrance doors need to have a 60 mins fire rating. Bloom already has the technology to make such doors and is certified by an approved authority giving itself an edge over a large number of players in the industry. Investments in this space is what Bloom is placing its bets on and working towards the future.

Despite having products catering to the modern developers and a futuristic market, Bloom is treading carefully owing to the appalling conditions of the real estate market in overall. Unfortunately, the building material supplier space has become more of a financing business. Merely supplying good quality products isnt enough and providing a large percentage of the due payment against supply of products and services as clean credit has become the new norm. Completely one-sided payment terms and slow judiciary in resolving disputes makes doing business in this space highly risky. Evaluating each transaction carefully and declining the ones with a high risk of bad debt along with intelligent allocation of limited funding towards expanding market challenges the growth scenario which otherwise can be extremely lucrative owing to advances in fire safe technology, eco-friendly products and engineered products that can guarantee consistent good quality supplies in larger volumes.

Indian Laminate Market

Supplies in the Indian laminate space have significantly surpassed the consumption levels with most manufacturers having spare capacity calling for desperate terms of making business happen involving high risks of financial turbulence. In an industry where product differentiation by brand is next to impossible, manufacturers are at the mercy of channel partners in realizing their sales and on time payments. This over saturated market is now flocking towards exports where competition is increasing by the hour. Utilizing capacity in whatever manner with low risks of payment defaults by squeezing operating margins have become a priority in overcoming this current wave challenging sustainability. Bloom too is re-evaluating business scenarios closely by investing in export markets, as in past, along with reducing dependency on domestic channel partners in order to remain sustainable with lower risks of bad debts and disputes.


Revival of Real Estate: With signs of revival of the real estate market in addition to the reduced risk in the industry thanks to the real estate regulations latest act, the delayed projects are now resuming and picking up pace thus forming a positive outlook in the coming future.

Exports: With still a largely untapped market, Blooms efforts in reviving its export share are underway which will lead to increased profitability, better cash flows owing to more secured payments, natural hedging against import of raw material and a larger percentage of capacity utilization due to the size of the orders. All these factors will improve the per sheet realizations as well.


Over supply:

The laminate industrys biggest threat is the oversupply of products in the domestic market. With low entry barriers and seemingly lucrative market for utilizing the capacities with low cost products, the unorganized entrants have flooded the markets with price of the product as the only deciding factor. The organized players are investing and entering the exports markets aggressively to not just get better value for their products but also receive assured timely payments which in India is a big mess currently.


The Company ‘s operation predominantly comprise of only one segment. In view of the same,separate segmental information is not required to be disclosed as per the requirement of Indian Accounting Standard 108 Operating Segment


Focus on Exports:

The Company focuses to significantly increase the export sales and put all its efforts in developing and growing the export markets of laminates. To elaborate, the company is presently exporting laminates to mainly Gulf and Middle East and other Asia Pacific countries. However, there is a much bigger export potential available both in terms of number of countries which can be covered and also additional supplies that can be made to the existing distributors/dealers/buyers in the international market.

With investment in fire rated doors for developers along with engineered products for consistent and good quality supplies promise a positive outlook in the doors division. With revised distribution strategy putting more focus on payment security and profitability and less dependency on channel partners, Bloom is careful in not putting all its eggs in a single basket thereby reducing the risk of business disputes and ensuring better cash flows for sustainability.


A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks.


Equipping Bloom with an engaged and productive workforce is essential to our success. We look for commitment, skills and innovative approach in people. In assessing capability, we consider technical skills and knowledge that have been acquired through experience and practice, along with mental processing ability, social process skills and their application.

We continue to invest in developing a pipeline of future talent and nurture them. As part of this process, we provide development and training opportunities to our workforce, which motivates and encourages them to grow in their work.

As on March 31, 2019 the company has 90 employees at its manufacturing plants and administrative office. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the upper growth.


Financial Performance:

The net revenue from operations decreased to र 5104.12 lakhs as against र 6,610.46 lakhs in the previous year showing a downward trend of 22.79% due to decrease in domestic sales of Laminates and Door. However, the export sales have increased from र 945.26 lakhs in FY 2017-18 to र 1175.47 lakhs in FY 2018-19.

The loss before Tax for the current year is र 919.53 lakhs as against the loss before tax of र 369.95 lakhs in the previous year resulted into loss after tax of र 733.19 lakhs compared to loss after tax of previous year र 150.93 lakhs.

The reason for Loss is increase in the Employment Cost, Production Loss and Finance Cost. During the financial year 2018-19, the companys major loss is attributed to following factors:

a) Withdrawal of Buyer Credit:

Sales were impacted because of the sudden stoppage of buyers credit. However, during this period since the buyers credit rollovers stopped too, also impacted our ability to establish regular LCs in favor of our suppliers. Because of this situation, although we have enough orders we were not able to produce for want of adequate raw material inflow for the required sizes as per the market demand, this saw one of the lowest capacity utilization that we have achieved in last few years.

b) Capacity Under Utilization:

Because of the sub-optimal operations the profitability of the company has also suffered badly in FY 2018-19 more particularly during the second half of fiscal 2018-19. Thus, while the company had to incur fixed overheads, because of very poor capacity utilization resulting into very poor sales the said fixed overheads could not be covered resulting into operating loss as well as net loss.

c) Market Forces:

The domestic market sifting to the oversupply scenario and channel distributors started adopting dirty business practice. And the company had no other choice but to ask for unpaid stock return. This resulted in excess inventory and blockage of huge working capital. Thus, the company started cutting supplies to all those undesirable distributors/dealers and this was also one of the reasons why there was a deliberate reduction in the sales of laminates in the domestic market.


The Company has aligned its current systems of internal financial control with the requirement of Companies Act 2013. The Internal Control is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The Company has successfully laid down the framework and ensured its effectiveness. The Company has in place a well-defined system to record data for accounting and management information purposes and connects to different locations for efficient exchange of information. It has continued its efforts to align all its processes and controls with global best practices.

Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the organization to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources. Apart from these internal control procedures, a well-defined and established system of internal audit is in operation to independently review and strengthen these control measures, which is carried out by a reputed firm of Chartered Accountants. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors of the Company and the audit committee. The conduct of internal audit is oriented towards the review of internal controls and risks in its operations.

The audit committee reviews the action taken reports submitted by the management, audit reports submitted by internal auditors and statutory auditors. Suggestions for improvement are considered by the board and the audit committee follows up on corrective action. The audit committee also meets the statutory auditors of the Company to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major- observations periodically. Based on its evaluation (as defined in section 177 of Companies Act 2013), our audit committee has concluded that, as of March 31, 2019, our internal financial controls were adequate and operating effectively.


This report contains statements that may be "forward looking" including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Companys future business developments and economic performance. While these forward looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. Company undertakes no obligation to publicly revise any forward looking statements to reflect future/likely events or circumstances.