This may be read in conjunction with the Directors Report
Global Economy
ANNEXURE - D
(Forming Part of the Directors Report)
The year 2022 proved to be a tumultuous period for the global economy.
Since the beginning of the year, there were a lot of growing voices about the
deteriorating situation in Ukraine, but the beginning of the con?ict took all by surprise.
While the loss of human life and the sufferings it induced is undeniably unfathomable, its
impact on the overall global economy was also profound.
The surge in in?ation witnessed across commodities in the aftermath of
the con?ict, added to the already elevated in?ationary concerns across economies grappling
with the fractured supply chain networks resulting from the COVID fallout. This led to
unprecedented, synchronized increases in policy rates across all major economies which not
just resulted in monetary policy tightening across the emerging economies but also led to
signi?cant forex reserve challenges in many economies, ultimately impacting the business
conditions across many markets.
As per RBIs recent Monetary Policy Statement in August 2023, the
global economy is slowing and growth trajectories are diverging across regions amidst
moderating but above target in?ation, tight ?nancial conditions, simmering geopolitical
con?icts, and geoeconomic fragmentation. Sovereign bond yields have hardened. The US
dollar fell to a 15-month low in mid-July on expectations of an early end to the monetary
tightening cycle, although it recouped some of the losses subsequently. Equity markets
have gained on expectations of a soft landing for the global economy. For several emerging
market economies, weak external demand, elevated debt levels and tight external funding
conditions pose risks to their growth prospects.
The International Monetary Fund in its World Economic Outlook published
in July 2023 has projected Global growth to fall from an estimated 3.5 percent in 2022 to
3.0 percent in both 2023 and 2024. The rise in central bank policy rates to ?ght in?ation
continues to weigh on economic activity. Global headline in?ation is expected to fall from
8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024. Underlying (core)
in?ation is projected to decline more gradually.
In most economies, the priority remains achieving sustained disin?ation
while ensuring ?nancial stability. Improvements to the supply side of the economy would
facilitate ?scal consolidation and a smoother decline of in?ation toward target levels.
Globally from a growth perspective , developed economies will continue to be on a
tightrope walk, balancing in?ationary pressures on one hand and economic recovery on the
other.
Indian Economy
The Indian economy, too, encountered headwinds during the year.
Following the sharp rebound in domestic economic activity during the second half of the
previous ?nancial year, FY 2022-23 was a year of normalisation with demand in many sectors
gradually moderated, yet remaining robust. Global risk aversion on the back of the rapid
rate increases by the developed economy meant persistent pressure on the exchange rate,
adversely impacting import-dependent businesses such as ours. Simultaneously, the Reserve
Bank of India tightened the monetary policy to counteract the sticky in?ation in the
economy. Consequently, the Indian economic growth was expected to be lower - at about 6.8%
to 7% mark for FY 2022-23, as compared to 9% registered for the previous ?scal year.
However, in a year which saw growth decelerating across the world with recessionary
expectations building up, the Indian economy still exhibited resilience, underpinned by
robust domestic consumption demand and well supported by the Governments push in various
parts of the economy.
The Indian economy, however, appears to have moved on after its
encounter with the pandemic, staging a full recovery in FY22 ahead of many nations and
positioning itself to ascend to the pre-pandemic growth path in FY23. Yet in the current
year, India has also faced the challenge of reining in in?ation that the European strife
accentuated. Measures taken by the government and RBI, along with the easing of global
commodity prices, have ?nally managed to bring retail in?ation below the RBI upper
tolerance target in November 2022. However, the challenge of the depreciating rupee,
although better performing than most other currencies, persists with the
likelihood of further increases in policy rates by the US Fed. The
widening of the CAD may also continue as global commodity prices remain elevated. The loss
of export stimulus is further possible as the slowing world growth and trade shrinks the
global market size in the second half of the current year.
Despite these, the macroeconomic outlook for India remains broadly
positive and the growth momentum of the Indian economy remains strong. Most global and
domestic forecasters predict growth in the range of 6% to 6.5% in continuity of the
healthy GDP for FY 2022-23 . These optimistic growth forecasts stem in part from the
resilience of the Indian economy seen in the rebound of private consumption seamlessly
replacing the export stimuli as the leading driver of growth. The positive sentiments are
supported by strong fundamentals , which inter-alia are robust tax collections, moderation
in in?ation, narrowing current account and ?scal de?cit, increasing foreign exchange
reserves, steady manufacturing PMI, better capacity utilization, sustained capex in both
the public and the private sector, growing employment levels in the urban as well as the
rural areas, and targeted social security measures, stable interest rates , lower NPAs and
improvement in credit culture. The Governments emphasis on infrastructure development,
digital transformation, and reforms in various sectors will sustain the growth momentum of
the Indian Economy . India is the third-largest economy in the world in PPP terms and the
?fth largest in market exchange rates.
Industry Structure and Developments
Indias Export of Indian Sports Goods and Toys remained stable during
FY 2022-23. As per data based on the export returns submitted by its members, compiled by
The Sports Goods Export Promotion Council, the export of sports goods & toys for the
year 2022-23 has been recorded as 1,778 Crore as compared to
1,814 Crore during 2021-22, with a marginal decline in Rupee terms.
India exports a variety of sporting goods including in?atable balls,
tennis balls, table tennis, tennis, and badminton rackets, general exercise equipment,
gymnastics articles, cricket gear, sportswear, toys, recreational games, puzzles, video
games, parlour and billiard games, casino articles, festive, carnival and entertainment
articles, swimming and outdoor games equipment, ?shing and hunting equipment, swings,
circus, shooting gallery and fairground amusement article. The export destinations for
export of sports goods mainly are US, UK, Australia, Germany, UAE, Netherlands, France,
South Africa, Sweden, and Canada. Major international brands such as Mitre, Umbro, and
Wilson source their in?atable balls and other sports goods from India. As per earlier
India Exim Bank analysis, the UK is the largest importer of Indias export of Tennis
balls, in?atable balls, and other balls (excl. golf balls, and table tennis balls),
followed by Australia and UAE in the same order of exports. For festive article exports,
the USA is the major importer with a signi?cant share in the overall exports. UAE is one
of the key importers of articles and equipment for table tennis, tennis, badminton, and
similar rackets commanding a major share of the total exports. Indias exports of Water
Sports Equipment have signi?cant demand from countries like Spain and Sri Lanka. Indias
exporters actively tap developing countries like Brazil, Mexico, South Africa, Chile,
Columbia, Argentina, Nigeria, Peru, and Ecuador, which have signi?cant demand for sports
equipment and supplies. Most of the production of sports goods is outsourced to the Asia-
Paci?c region, making it one of the worlds largest sports goods manufacturing regions.
During 2019-20, India was the 24th largest exporter of sports goods in the world,
accounting for 0.56% of the global exports of sports goods, indicating signi?cant headroom
for growth in the future.
The sports goods industry is highly competitive globally due to the
presence of numerous established multinational companies. India has made signi?cant
progress in boosting its soft power and has become a major player in the sporting goods
sector, ranking as the third largest manufacturer in Asia. The sports goods industry of
India is nearly a century old and holds a prominent position in the global market. The
industry has ?ourished, driven by a skilled workforce hence known for its role in creating
employment and contributing to the countrys economy. The industry employs more than
500,000 people. India currently manufactures more than 300 sports- related goods such as
toys, video game consoles and articles, festive and carnival articles, gymnastics and
sportswear goods, ?shing articles, outdoor games, toys, etc. Uttar Pradesh, Punjab,
Maharashtra, Delhi, Tamil Nadu, Jammu, and West Bengal are among Indias top sports
goods-producing states. Among these, Jalandhar City in Punjab and Meerut City in Uttar
Pradesh account for about 75-80% of the total production in the country. Foreign Brands
and overseas manufacturers/suppliers from China and other countries are having edge over
Indian manufacturers. Sports Industry in India needs continuous Technological Upgradation,
Setting up of
composite sports clusters equipped with technical and logistics support
of international standards and JVs with global Industry leaders. The Industry needs to
diversify its product range and should go in for the production of Hi- tech sports items
and physical equipment(s). The Indian Sports Goods Industry is gradually moving towards
mechanization on a reasonable scale for increasing productivity and competitiveness of
Indian Sports Goods Sector. The Industry is gradually adapting new technology to keep up
with the changing global trends.
Government is focusing on overall growth of Sports Sector and
development of Infrastructure for Sports. Public Private Partnership in creating Sports
Infrastructure are being encouraged. Sports Infrastructure utilization needs to be
optimized. The sports goods industry has potential for employment, growth and export and
to become the next big industry in India.
Initiatives by Government and Authorities for Sports Promotion
The government aims to transform India into a global sporting
powerhouse with a long-term impact on health, education, and tourism by undertaking
mega-sports infrastructure projects and encouraging investments through the public-private
partnership (PPP) model. To boost the sporting goods manufacturing sector, the government
has established the Sports Goods Export Promotion Council (SGEPC), dedicated to promoting
Indias sports goods exports. SGEPC regularly organizes both international and domestic
trade events to provide Indian manufacturers with exposure to global market trends and a
platform to showcase their products. The Market Access Initiative (MAI) scheme and the
Remission of Duties and Exported Products (RoDTEP) scheme have been implemented to promote
the export of Indian goods and services.
Government of India under Union Budget 2023 has announced 27% hike
leading to highest-ever sports budget and 67% increase in Khelo India Scheme.
The Sports Authority of India (SAI) that works supporting the Ministry
of Youth Affairs and Sports is credited for the advancement of Sports and Games in the
country. Authority formulates and executes a progression of changes and schemes to help
Sports department. The various initiatives taken by the Government in the recent past to
boost the sports is yielding results and will have positive impact on the sports industry
in future . The Key Schemes of the Government namely Khelo India Scheme , Target
Olympic Podium Scheme , Fit India Movement and other initiatives have transformed the
Sports in India.
Khelo India Scheme – the National Programme for development of
sports was launched in 2016 post the fusion of three earlier schemes – Rajiv Gandhi
Khel Abhiyan (RGKA), Urban Sports Infrastructure Scheme (USIS), and National Sports Talent
Search Scheme (NSTSS) . The Khelo India programme has been introduced to revive the sports
culture in India at the grass-root level by building a strong framework for all sports
played in our country and establish India as a great sporting nation. The plan endeavors
to advance "Sports for All" as well as "Sports for Excellence". The
plan was revamped in the year 2017 with an aim to mainstream sports as an instrument for
individual and local area development, monetary development, and national development. The
scheme is the key to giving athletes from all across the country to show case their
sporting skills on a national platform and to be identi?ed for further training. The
scheme supports athletes with scholarship. The Central Government in partnership with
States has set up Khelo India Centres of Excellence – the state of art training
centres for senior and elite athletes with a focus on speci?c sporting disciplines. In
addition, Khelo India accredited academies, private academies and adopted schools where
Khelo India Athletes and Sportspersons are trained have added to the strength of the
sporting infrastructure. With a view to achieving the twin objectives of mass
participation and promotion of excellence in sports, the Government of India has decided
to continue the Scheme of -Khelo India – National Programme for Development of Sports
over the 15th Finance Commission Cycle (2021-22 to 2025-26) at an outlay of 3165.50
crore.
Fit India Movement was launched on the occasion of National Sports Day
on 29 August, 2019 by Honble Prime Minister, to make ?tness a way of life for every
citizen. Citizens across India, from school students to youngsters to seniors, are
participating in various ?tness activities such as marathons, cyclothons, runs and more,
throughout the year , making it a Peoples movement. Sports Talent Search Portal was
launched to recognize the best talent among the youth of India. The portal allows
youngsters to upload their achievements. Signi?cant level committee constituted in 2017 on
the occasion of International Women Day in 2017. to address complaints and issues of women
sportspersons. The Empowered Steering Committee (ESC) was comprised in
January 2017 on the recommendations of the Olympic Task Force for
preparing a far-reaching action plan for the powerful participation of Indian players in
the Olympic Games of 2021 (Tokyo), 2024 (Paris), and 2028 (Los Angeles). National Sports
Awards Scheme acknowledges and respects sports personalities with the Arjuna Awards, Rajiv
Gandhi Khel Ratna, Dhyanchand Awards, and Dronacharya Awards for their achievements and
commitments as sportspersons and coaches in the ?eld of sports. Sports and Games for
Persons with Disabilities Scheme - Under this plan, the differently-abled sportspersons
are trained in their ?eld for conducting sports competitions and assisting schools and
institutes having differently-abled sportspersons.
Target Olympic Podium Scheme - The Sports Ministry released the Target
Olympic Podium (TOP) Scheme in May 2015 under the National Sports Development Fund (NSDF)
to help the potential medal possibilities for the Olympic Games. The main focus is given
to Athletics, Badminton, Boxing, Archery, Wrestling, and Shooting sports.
Sports can make signi?cant socio- economic impact on a nation and its
citizens. It plays an important role in ensuring physical ?tness and healthy lifestyle
among the citizens of a country. It unites people from diverse backgrounds, hence
promoting peace and development. With the Government providing numerous opportunities to
sportspersons, sports also promotes social inclusiveness. Greater sports participation is
critical to the future health and productivity of Indias large population.
Market Development Assistance (MDA) Scheme
The MDA scheme works mainly to assist exporters in export promotion
activities in the international markets. The scheme also assists the respective export
promotion councils in undertaking export promotion activities for their products.
Similarly, through this scheme, the government helps focus export promotion programs on
international regions such as the LAC, Africa, CIS, and the ASEAN economies.
Market Access Initiative (MAI)
The main objective of the MAI scheme is to promote the export of Indian
goods to international markets. Under this scheme, ?nancial assistance will be provided to
export & trade promotion organizations, national institutes, research institutes,
exporters, etc. The parameters covered under the ?nancial aid will be marketing projects,
capacity enhancement, supporting statutory compliances, studies, research, project
development, and supporting cottage and handicraft units in India.
Opportunities & Threats, Risks and Concerns:
The sports sector has the potential to make signi?cant contribution to
the economy. The Indian Government has made improving sports outcomes a strategic
priority. The Government of India is making signi?cant investment on the development and
promotion of Sports as stated hereinbefore. In Indias Economic growth story, the Sports
and Sports goods Industry will continue to have signi?cant role to play.
The Sports Industry in India has some good quality manufacturing units
and skilled manpower base. New Markets and Overseas buyers, who are also looking for
alternate sources of supply in addition to China and developing countries, need to be
explored for Exports.
In recent years, India has seen an in?ux of sports-focused start-ups.
With the growing importance of sports, many entrepreneurs have ventured into the industry
to cater to the needs of athletes and sports enthusiasts. These startups are attracting
investment from venture capitalists and other investors, contributing to the growth of the
sports manufacturing industry. The sports sector in India is expected to see continued
growth through start-ups as the market is still in its early stages. These start-ups offer
a range of services such as online ticket purchasing, prediction games, and the provision
of high-quality sports and ?tness products and equipment. These sports start-ups are
primarily focused on delivering sports-related services and products to people in the
country.
Our company manufactures mainly Sports Balls and deals in vide range of
Sports Goods and Fitness Equipments. It has tie ups and arrangements with reputed
International and Domestic manufacturers /suppliers. The Company has network of branches,
distributors and more than 760 authorized dealers in India and is one of the leading and
most organized Indian Company in Sports Industry. The Company on continuous basis
upgrades the quality of its products with in-house R & D. The
products manufactured/traded by the company conform to International Standards. The
Companys Cosco Brand is well recognized in the Domestic Market. The company has immense
potential to leverage upon its brand, accreditation and quality to increase sales and
pro?tability.
Segment-wise product-wise performance
The Companys products segments are classi?ed broadly into two segments
viz
Own manufactured products viz Sports Balls
Traded Goods viz Fitness Equipments and other Sports Goods.
The Segment wise performance and relevant information is given in Notes
on the Financial Statements (Refer Note No. 33 of Notes on the Financial Statements –
Segment Information)
Outlook
The Indian sports –goods market is expected to grow to USD 6.6
billion by 2027 from USD 3.9 billion in 2020-21. Sports in India have come a long way in
the last few years. Khelo India School Games initiative has encouraged a shift in the
way people thought about sports, especially at the grass-root level. Greater sports
participation is critical to the future health and productivity of Indias large
population. The initiatives of the Government Khelo India Scheme , Target Olympic
Podium Scheme , Fit India Movement And of the Sports bodies for organizing regular
sports events such as Indian Premier League (Cricket), Hockey India League, Indian
Badminton League, Prokabbadi, Indian Super League (Football) and professionalization of
Heritage sports events such as Goti, Gilli Danda, Lagori, Kilithatt, Gatta Gusthi are
changing the old face of Indian sports. This is driving demand for better sports systems,
facilities and inputs . Over the last few years, the activity around the business of
sports has been tremendous in these domestic leagues. These initiatives have shown
Indians, a world of sports beyond cricket. Indian Sportspersons have been making mark in
various sporting disciplines in international competitions.
India is now being seen as a power to reckon with. Several elite
international sports bodies have chosen India as host country in recent years. The 44th
FIDE Chess Olympiad, The U-17 FIFA World Cup held in 2022, AIBA World Boxing Championship
and the ISSF Shooing World Cup held in 2023 across various cities have boosted Indias
stature in Sports . Govt. of India and State Governments are gradually increasing
budgetary allocations for Sports and taking progressive policy initiatives to promote
Sports and Sports Industry.
These initiatives prove that sports have a future in India as a
business.
Demand for sporting goods and ?tness goods is growing with Indias
burgeoning consumer class with the ongoing rise in popularity of outdoor and home-based
sports. There is ever growing awareness about Sports and Fitness among the urban as well
as rural population, which will further boost this product segment in India. Many
multinational organizations have in-house gymnasiums or sponsor their staff for sports and
?tness activities and/or organize intra-of?ce sports events.
Looking ahead to the future of the sporting goods industry, Cosco
(India) Limited expects that competition in the global market will remain severe despite
global increases in health consciousness and growth in the number of people participating
in sports in emerging countries. Your Company has con?dence on intrinsic strengths of its
brands, innovation capabilities, strong distribution network and cost ef?ciency programs.
Your Company is well positioned with its strong management team, technology interventions
and robust processes. The company sees promising future of Sports and Health & ?tness
in India.
Threats
Competition from Global Brands and their popularity amongst Indian
consumers;
The challenges of supply chains;
Skilled Manpower constraints & rising manpower costs;
Infringement of Companys Brand and Trade mark by grey market
operators;
High taxes levied on Sports and Fitness equipments and lack of ?nancing
for consumers ;
Infrastructure constraints for development of Sports;
Internal control systems and their adequacy.
The internal control systems of the Company provide for policies,
guidelines, authorizations and approval procedures. Your Company has in place adequate
internal control systems and procedures commensurate with size and nature of its business.
All the transactions are properly authorized, recorded and reported to the Management. The
Company has appointed Internal Auditors who conduct Internal Audit periodically. Audit
Committee reviews Internal Audit Reports and adequacy of internal controls for ensuring
checks and balances and that internal control systems are properly followed. The system of
internal ?nancial control ensures that all transactions are evaluated, authorized,
recorded and reported accurately and that all assets are safeguarded and protected against
losses that may arise from unauthorized use or disposition. Board has taken note of the
observations of the Auditors for improvement in some areas of Internal Financial Controls
and Scope of Internal Audit, which have been dealt in the main Directors Report under the
head Independent Auditors Report. Board is of the opinion that the Companys internal
?nancial controls were reasonably adequate and effective during the ?nancial year 2022-23.
The company will further strengthen its Internal Financial Controls in areas observed by
the Auditors.
The company is following the applicable Accounting Standards and has
prepared ?nancial statements for the year ended 31.03.2023 in accordance with Ind AS. The
Company prepared its ?nancial statements in accordance with Generally Accepted Accounting
Principles (GAAP) in India and complied with the Accounting Standards.
Discussion on ?nancial performance with respect to operational
performance.
The relevant information is given in the Directors Report under
headings Financial Results, Companys Performance and State of Affairs for Financial Year
2022-23 read with the Financial Statements.
Material developments in Human Resources/Industrial Relations
The thrust of the Company is to create responsive and market driven
organization. The management believes that Human Resources is the driving force towards
progress of the Company and regards it as its most valuable asset. The Management believes
in trust, transparency and teamwork. The Company seeks to motivate and provide
opportunities to its personnel to grow with the organization. Your company has a total
strength of about 455 employees as on 31.03.2023. Your Directors are thankful for the
con?dence reposed by all associated with the Company and their continued support. The
relations with employees remained cordial and satisfactory during the year under review.
Key Financial Ratios
In accordance with the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the Company is required to give details of signi?cant
changes (change of 25% or more as compared to the immediately previous ?nancial year) in
key ?nancial ratios.
Following are the key ?nancial ratios:
Particulars |
2022-23 |
2021-22 |
Debtors Turnover Ratio |
7.00 |
6.04 |
Inventory Turnover Ratio |
2.10 |
2.17 |
Interest Coverage Ratio |
1.23 |
1.63 |
Current Ratio |
2.00 |
2.09 |
Debt Equity Ratio |
1.13 |
1.08 |
Operating Pro?t Margin (%) |
3.97 |
5.28 |
Net Pro?t Margin (%) |
0.45 |
1.41 |
Return on Net Worth (%) |
1.46 |
4.19 |
Reason for signi?cant change:
Decline in Operating Pro?t Margin and Net Pro?t Margin due to increase
in Employee bene?t expense, increase in Financial cost and increase in Depreciation &
Amortization expenses ; lower operating margins in some products pursuant to market
competition, Impact on sales revenue due to disruptions in the supply chain;
Decline in Interest coverage Ratio due to lower Net Comprehensive
Income pursuant to lower Net Pro?t Margin and higher interest Costs
Decline in Return on Net Worth due to lower Net Comprehensive Income
pursuant to lower Net Pro?t Margin;
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis Report describing
the Companys objectives, expectations or forecasts may be forward-looking statements
within the meaning of applicable laws and regulations. The actual results may differ
materially from those expressed in the statements due to various factors viz. market
conditions, input costs, changes in the regulations, economic development within/outside
country etc.
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