Today's Top Gainer
Note:Top Gainer - Nifty 50 More
This may be read in conjunction with the Directors Report
Indias growth of real GDP has been high with average growth of Rs.7.5 per cent in the last few years from 2014-15 onwards. However, the Indian economy grew at 6.8% in FY 2018-19,which was lower than 7.2% growth registered in FY 2017-18. The Indian economy started the FY 2018-19 with about 8% growth in the first quarter on the back of domestic resilience. Growth declined in the subsequent quarters due to contraction both in Industry and Agriculture & allied sectors.
Year 2018 was difficult for the Global economy with the world output growth falling from 3.8% in 2017 to 3.6% in 2018. Growth rate of the world output is projected to fall further to 3.3% in 2019 as growth of both advanced economies and emerging and developing economies are expected to decline due to various factors inter alia rising global volatility, largely from financial volatility, normalized monetary policy in advanced economies, externalities from trade disputes, and investment rerouting.
The market demand remained stagnant due to moderation in the growth of the Indian economy and difficult global economy.
Despite these challenges, the Indian economy remains one of the fastest growing and possibly the least affected by global turmoil supported in part by Indias strong macroeconomic fundamentals and policy changes (including amendments to the policy/code related to insolvency and bankruptcy, bank recapitalization, and foreign direct investment).
Currently, India is the fastest-growing trillion-dollar economy in the world and is expected to reach US$ 6 trillion by Fiscal 2027 and achieve upper-middle income status on the back of digitization, globalization, favourable demographics, and reforms. India is expected to be third largest consumer economy as its consumption is expected to touch to US$ 4 trillion by 2025. India is likely to become the worlds second largest economy by 2030, next only to China. India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF) and it 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.
Industry Structure and Developments
Indias Export of Indian Sports Goods and Toys remained stable during FY 2018-19. 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 2018-19 has been recorded as 1183.60 Crore (USD 169.11 million) compared to 1079.35 Crore ( USD 166.98 million) during 2017-18, with a marginal growth in USD terms.
Indias share of Sports Goods in the global market is quite low. The main items exported from India were Inflatable Balls, Inflatable Balls Accessories, Sports Nets, Athletic Goods (General Exercise Equipments), boxing equipments, toys and games, Protective Equipment, Cricket Equipment, Sportswear, carom boards and hammock. The main export destinations were United Kingdom, Australia, USA, Germany, South Africa, France, New Zealand, Canada. India has emerged as one of the preferred international sourcing destination for inflatable balls and other sports goods for leading international brands.
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. The main clusters of sports goods industry in India are in and around, Gurgaon, Jalandhar and Meerut.
Indias sports goods industry is nearly a century old and has flourished, driven by a skilled workforce. Being labour-intensive in nature, the industry provides employment to many people. Sports Goods Industry in India is thriving for more skilled & talented workforce. 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. 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. Development of Sports Sector in India has been lagging due to inadequate infrastructure. Public Private Partnership in creating Sports Infrastructure needs to be encouraged. Sports Infrastructure utilization needs to be optimized. Govt. of India and State Governments are gradually increasing budgetary allocations for Sports and taking progressive policy initiatives to promote Sports and Sports Industry.
Opportunities & Threats, Risks and Concerns:
The Government of India has taken some major initiatives such as Khelo India Scheme, which focusses on developing sports infrastructure in rural as well as urban areas, encouraging sporting culture through competitions, and identifying and nurturing talent. The youth India is taking keen interest across diversified Sports and the popularity of sports is increasing among the masses. Girls and Women are actively participating in Sports events. Awareness about Health & Fitness is ever growing across all age groups. The domestic market for Sports Goods and Health equipments etc. is set to grow further with these developments.
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. The Sports Industry in India has some good quality manufacturing units and skilled manpower base.
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 profitability.The 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 about 780 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.
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. 31 of Notes on the Financial Statements Segment Information)
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.
Economic indicators of the first quarter of the current year are not encouraging. The Sports Industry will need to overcome challenges of current economic slowdown. 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 IPL are being organized in India across different sports segments. 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 company see promising future of Sports and Health & fitness in India.
1. Infringement of Companys Brand and Trade mark by grey market operators;
2. Infrastructure constraints for development of Sports;
3. Competition from Global Brands and their popularity amongst Indian consumers;
4. Skilled Manpower constraints & rising manpower costs;
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 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 has taken note of the observations of the Auditors for improvement in certain 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 financial controls were adequate and effective during the financial year 2018-19.
The company is following the applicable Accounting Standards and has prepared financial statements for the year ended 31.03.2019 in accordance with Ind AS. The Company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India and complied with the Accounting Standards (Previous GAAP).
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 2018-19 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 412 employees as on 31.03.2019. Your Directors are thankful for the confidence 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) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of Rs.25% or more as compared to the immediately previous financial year) in key financial ratios.
Following are the key financial ratios:
|Debtors Turnover Ratio||5.33||5.18|
|Inventory Turnover Ratio||2.56||2.63|
|Interest Coverage Ratio||2.14||2.67|
|Debt Equity Ratio||1.21||1.20|
|Operating Profit Margin (%)||6.66||7.98|
|Net Profit Margin (%)||2.28||3.13|
|Return on Net Worth||7.90||11.64|
Reason for significant change:
Decline in Net Profit margin due to increase in operating costs, lower operating margins and market competition.
Decline in Return on Net Worth due to lower Net Profit Margin
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 factors such as market conditions, input costs, changes in the regulations, economic development within/outside country etc.