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MANAGEMENT DISCUSSION AND ANALYSIS (MD & A)
This may be read in conjunction with the Directors Report Economic Scenario
The Economic Survey for 2016-17 (Volume 2) released by the Government of India provides the outlook for 2017-18 as well as a review for the economy. The GDP growth at 7.1 % during the year 2016-17 was lower against 8% GDP growth during 2015-16, partly on account of demonetization. The review indicates building optimism in Indian Economy owing to various structural reforms viz. Implementation of GST, Positive Impact of demonetization, Rationalization of energy subsidies. The government has forecast of for real GDP in the range of 6.75% - 7.5% in 2017- 18.
Global GDP is projected to pick up modestly and is predicted to be around 3.5%. The majority of the worlds economic growth will continue to be derived from the emerging markets, particularly in Asia. India continues to be the front runner ahead of China.
Industry Structure and Developments
Indias Export of Indian Sports Goods and Toys remained positive despite the Global era of uncertainties in the last few years, Indias Exports of Sports Goods and Toys in Rupee terms during FY 2016-17 was Rs. 1095.33 Crores compared to Rs. 1024.56 Crores during 2015-16 as per export data with Sports Goods Export Promotion Council, thus registering modest growth of 6.91%. The main items exported from India continue to be Inflatable Balls, Inflatable Balls Accessories, Sports Nets, Athletic Goods (General Exercise Equipments), Protective Equipment for Cricket, Cricket Bats.. The main export destinations are United Kingdom, Australia and USA.
The Indian Sports Goods & Toys industry is striving hard to maintain the momentum of growth underpressure of global competition. Indias share of Sports Goods in the global market is quite low. Foreign Brands and overseas manufacturers/suppliers from China and other countries are having edge over Indian manufacturers. Sports Goods Industry in India has been predominantly in small and tiny sector based on manual processes. Sports Goods Industry in India is thriving for skilled & talented workforce. The unorganized sector is predominant and accounts for about 75 per cent. The main clusters of sports goods industry in India are in and around, Gurgaon, Jalandhar and Meerut. 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.
The sports goods industry has potential for employment, growth and export. Sports Industry in India needs Technological Upgradation, Setting up of composite sports clusters equipped with technical and logistics support of international standards and JVs with global Industry leaders. Budgetary allocations for Development of Sports in India have been quite less compared to the expenditure on sports by developed countries. Govt, of India and State Governments are gradually increasing budgetary allocations for Sports and taking progressive policy initiatives to promote Sports and Sports Industry.Development of Sports Sector in India has been lagging due to inadequate infrastructure.
Opportunities & Threats, Risks and Concerns:
The domestic market for Sports Goods and Flealth equipments etc. is expanding. Awareness about Flealth & Fitness and increasing popularity of sports will continue to drive market domestic growth of these products. The Sports Industry in India has some good quality manufacturing units and skilled manpower base. Overseas buyers, who are also looking for alternate sources of supply in addition to China and developing countries need to be explored for Exports.
Our company is dealing in vide range of Sports Goods and Fitness Equipments. The company manufactures mainly Sports Balls and has tie ups and arrangements with reputed international and Domestic manufacturers /suppliers. The Products are marketed mainly under Cosco Brand, which is well recognized in the Domestic Market. The Company has network of branches, distributors and about 760 authorized dealers in India and is one of the leading and most organized Indian Company in Sports Industry. The company has immense potential to leverage upon its brand, accreditation and quality to increase sales and profitability. 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 company is also exploring new markets for export.
Segment-wise product-wise performance
The Companys products segments are classified 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. 34 of Notes on the Financial Statements Segment Information)
The company see promising future of Sports and Health & fitness in India. 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. Private Gymnasiums are growing at faster pace. Many multinational organizations have in-house gymnasiums or sponsor their staff for sports and fitness activities and/or organize intra-office sports events. The Government and Sports Organizations are taking initiative to promote Sports and are endeavoring for organizing more Sporting events in India. More Sports events on the lines of IPLare being organized in India across different sports segments. -
1. Competition from Global Brands and their popularity amongst Indian consumers;
2. Influx of cheap Chinese products;
3. Infringement of Companys Brand and Trade mark by grey market operators;
4. Skilled Manpower constraints & rising manpower costs;
Internal control systems and their adequacy.
Your Company has in place adequate internal control systems and procedures commensurate with size and nature of its business. The internal control systems provide for policies, guidelines, authorizations and approval procedures. 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 company is following the applicable Accounting Standards. The system of internal financial 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 is of the opinion that the Companys internal financial controls were adequate and effective during the financial year 2016-17.
Discussion on financial 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 2016-17 read with the Financial Statements.
Material developments in Human Resources/lndustrial Relations
The Management believes in trust, transparency and teamwork. The thrust of the Company is to create responsive and market driven organization. The Company seeks to motivate and provide opportunities to its personnel to grow with the organization. The management believes that Human Resources is the driving force towards progress of the Company and regards it as its most valuable asset. Your company has a total strength of about 441 employees as on 31.03.2017. The relations with employees remained cordial and satisfactory during the year under review. Your Directors are thankful for the continued support and confidence reposed by all associated with the Company.