Comrade Appliances Ltd Management Discussions

<dhhead>MANAGEMENT’S DISCUSSION AND ANALYSIS </dhhead>

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

a. INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Indian consumer durables market is broadly segregated into urban and rural markets and is attracting marketers from across the world. The sector comprises of a huge middle class, relatively large affluent class and a small economically disadvantaged class. The sector includes consumer electrical such as fans, kitchen and cooking appliances, lighting devices, as well as white goods such as washing machines, televisions, refrigerators, and air coolers & air conditioners.

Market share in the consumer durables industry is moving from the unorganized to the organized sector. According to estimates, 30% of the total market is still unorganized, which provides listed Indian players with a significant opportunity to further increase their market share going forward. Artificial intelligence and manufacturing automation will be important future trends as consumer awareness increases regarding technology advancements and their applications across multiple sectors. In order to increase production efficiency of various consumer durables, Industry 4.0 will stimulate investments in R&D, technology infrastructure, and manufacturing processes.

The market size of air conditioners is expected to grow to 165 lakhs units by 2025 from 65 lakhs units in 2019, while refrigerators’ market size is expected to grow to 275 lakhs units by 2025 from 145 lakhs units in 2019.

1. Air Cooler Market in India

The air cooler market in India has been experiencing robust growth. As of 2020, the market was valued at approximately 3,750 crores. The market is currently expanding at a compound annual growth rate (CAGR) of 10-12%, with projections indicating that it could reach an estimated value of 7,500 crores by 2025. This growth is driven by factors such as rising temperatures, the affordability of air coolers compared to air conditioners, and the increasing demand for energy-efficient cooling solutions in both urban and rural areas.

2. Washing Machine Market in India

Similarly, the washing machine market in India has shown significant growth. In 2020, this market was valued at approximately 18,750 crores and is growing at a CAGR of 8-10%. By 2026, the market is expected to reach around 31,500 crores. The growth in this segment is fueled by rising disposable incomes, urbanization, and the increasing preference for convenient, time-saving home appliances.

Key Trends and Insights

Both markets are characterized by a strong demand for technologically advanced, energy-efficient, and affordable products. The rise in e-commerce platforms has also played a crucial role in making these products more accessible to a wider audience across India. However, it is important to note the price sensitivity in both segments, particularly in rural and semi-urban areas, which continues to shape consumer behavior.

In conclusion, the air cooler and washing machine markets in India present significant opportunities for growth and innovation. I hope this information proves useful for your strategic planning and decision-making processes.

We have over 5 years of experience in manufacturing sector. Since inception, we have expanded our product portfolio, customer base and gained technological expertise in designing and manufacturing of our products. We have an experienced Board of Directors and management team. Our management, including key managerial personnel or Senior Management has expertise and experience in the consumer goods industry.

Energy efficiency is becoming a focus area among global consumers as it not only reduces electricity consumption but also curbs environmental impact. Consumer electronics players can develop and promote products with high star ratings denoting high energy efficiency and sustainable materials.

Leveraging on the experience and knowledge derived from manufacturing our products, we are centre focusing on the research and development of electronics hardware designing, system architecture, mechanical design, component engineering and optics design and provide design enhancement and verification to our customers.

We are assisted by a highly dedicated and efficient team of professionals, well versed with the technicalities of their areas of specialization, they are capable to meet the exact demands of our clients. They hold immense knowledge about our products. Our greatest strength lies in our human resource that comprises a team of highly dedicated Professionals driven by a single-minded passion for achieving excellence in their field of their expertise.

While demand for the premium segment augurs well, demand trends for the mass segment have been under pressure in recent times. Meaningful volumes and scale in a country with

India’s demographic structure is only achieved by growth in the mass segment. Unless this picks up in the near term, this could continue to bear pressure on the industry as well as economy as a whole.

The presence of several unorganized and regional players in the market presents a notable challenge for consumer electrical brands. These competitors typically provide low-cost alternatives, many of which do not meet stringent quality standards or the fast-changing regulatory norms that larger players comply with. In an ecosystem where enforcement of regulations is lax and consumers’ willingness to pay more for better quality can be swayed, this poses a threat to the larger organized players.

The consumer appliances industry relies on complex supply chains for sourcing raw materials, components and finished products. While there is clearly rising indigenisation of these chains, the industry is unlikely to be completely independent of global sourcing for certain critical items. Challenges such as natural disasters, trade disputes, or geopolitical conflicts can disrupt the supply chain, leading to production delays, increased costs and inventory shortages.

The primary operating risks that could impact the Company relate to a slowdown in the construction, environment and investment cycles; exposure to seasonality for some of its businesses; competition from Indian and global players; volatile exchange rates; rising interest rates; credit risks; import dependence; procurement concentration risks; volatile commodity prices; changes in tax and other legislations; inflation, especially in the case of fixed price contracts; environment; health and safety; exposure to frauds; inadequate cyber security and changes in technology, which impact the Company’s product offerings. In addition, geo-political scenarios also pose a business continuity risk, apart from a general slowdown in the global and local economy which tends to intensify risks faced by the Company.

A confluence of factors on the global and local fronts, such as geo-political equations between countries, the usage of tariff and non-tariff barriers to address trade imbalances and volatility in the prices of crude oil, commodities, currency, and ocean freight, could impact consumer confidence. The Company will continue to closely monitor the macro and micro level trends in the global and Indian economy and will take necessary steps to address these challenges.

The Company has focused on internal control systems in true sense. The Company monitors the status of internal control in four areas, viz. reliability of financial reporting, legal compliance, operating effectiveness and efficiency, and protection of assets. In the event an issue is found, the management implements corrective measures to ensure the relevant department performs appropriate and effective internal control operations. The Company also keeps a check on the internal environment, information and communication and internal supervision of the activities of several departments of the Company.

During the year under review, the Company’s Authorized Share Capital is Rs. 11,00,00,000 (Rupees Eleven Crores only) divided into 1,10,00,000 (One Crore Ten Lakhs only) equity shares of Rs. 10/- (Rupees Ten only) and the issued, subscribed and paid up share capital of the company is Rs. 7,77,87,950/- (Rupees Seven Crore Seventy Seven lakhs Eighty Seven thousand Nine Hundred and Fifty only) divided into 77,78,795 (Seventy seven lakh seventy eight thousand seven hundred and ninety five) equity shares of Rs. 10.00/- (Rupees Ten only) each.

During the year under review, the company has earned total revenue of Rs. 5731.42 Lakhs against Rs. 2898.87 Lakhs in the previous year which is 97 % more than the previous year. The profit after tax for the year is Rs. 53.06 Lakhs against Rs. 52.52 Lakhs in the previous year.

Revenue from operations for the reporting period is Rs.5731.42 Lakhs as against Rs. 2898.97 Lakhs in the previous year which is 97 % more than the previous year. Your directors are hopeful that the Company may be able to show better performance in coming years

The reserves and surplus of the company for the FY2024-25 is Rs. 1240.73 Lakhs as against Rs. 940.17 in the previous financial year.