Desh Rakshak Management Discussions


MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In compliance of the provisions of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR Regulations 2015"), Please find Management Discussion and Analysis Report for the year 2022-23, forming part of Annual Report.

      1. INDUSTRY STRUCTURE & DEVELOPMENTS
      2. Company recognizes operations as an important source of competitive advantage and further believes in continually striving for higher and better levels of quality not just in its products, but also in its operations, without losing sight of its commitments towards the environment and communities where it operates. A host of initiatives are continually rolled out by the company to improve productivity while reducing its energy usage.

        Company is committed to create an open and transparent organization that is focused on people and their capability, and fostering an environment that enables them to deliver superior performance .Company continued to focus on expanding its product offerings to consumers by way of new product launches and expansion of existing products, thereby continuing to address the growing and ever changing needs of its consumers.

        Health care has been identified as an important growth engine for the future. Your Company is lining up a host of new initiatives for the same in Ayurveda and range of Ayurveda Based ethical and Classical and Health care products.

      3. OPPORTUNITIES AND THREATS
      4. The consumer landscape has been continuously evolving and one has to keep pace with the changing trends in order to win consumer confidence. The Herbal Wave in India offers a significant growth opportunity to be tapped and appropriate strategies need to be formulated to capture this opportunity. Desh Rakshak is capturing these opportunities by investing in brands that are positioned strongly on the herbal platform and appeal to the contemporary consumers. Desh Rakshak is leveraging its deep experience and heritage in the field of Ayurveda and building its business based on the Health and Wellness theme across categories. Currency volatility, slowdown in category growth rates and unpredictable weather patterns are some of the threats to the companys prospects.

      5. SEGMENT-WISE/ PRODUCT-WISE PERFORMANCE
      6. Products ranging from AmalkiChurna, Ashwagandha Tablet, TriphalaChurna, LavanaBhaskarChurna, Sat Shilajeet, ShunthiChurna, HingwadiChurna, GasharVati, BuddhivardhakYog, Balamrit, LodhraChurna,

        Narayan Churna, GangadharChurna, MustakaChurna, ShatavariChurna Tablet, Ashwagandha Tab, LavangadiChurna, ShringyadiChurna, ShatavaryadiChurna, MulethiChurna Tab., DantMohiniManjan, GokshurChurna, BhringrajChurna, MulethiChurna, DashmoolKwath, PunarnavastakKwath, SomkalpChurnaVachChurna, AshwagandhaLehyaBansavaleha, Chyavanprash Special, ChyavanprashVishesh, GiloySatva, HaridraKhanda, BrahmiGharit, TrifalaGharit, NeemTaila, JatyadiTailaDashmoolTaila, DhanvantaraTaila are products which are famous amongst the consumers. The list is far-reaching and faster consumption of all types of rasRasayan, Churna, Avaleha-Pak, Kwath Churn, Bhasma-Pisti, Guggul ,LouMandoor, Parpati , KupipakwaRasayan, Asava-Rishta, AushadhiTaila , Avaleha- Pak, Kshar-Satva making the Companys Products Competitive and best in the Ayurvedic Industry.

        With a portfolio of Ayurvedic and natural products, nature and herbs are the key to our existence and company continues to invest in Research & development in order to establish beyond the boundaries of Uttarakhand

        Company has a wide range of ethical healthcare products based upon the age-old system of Ayurveda. It has a wide range of ethical medicines that are derived from herbs and form part of this holistic healthcare system, focusing on all-round well-being. The range was promoted aggressively through focused activities. This centre seeks to promote Ayurveda among the urban Indians, besides enhance availability and visibility of Ayurvedic medicines

      7. OUTLOOK
      8. An improvement in the macro-economic fundamentals is expected to ramp up demand by improving the overall consumer sentiment. The Company expects demand to pick up as and when the disposable income in the hands of consumers increases due to pick up in economic activity and various government initiatives like NREGA, 7th Pay commission, implementation of DBT schemes etc .The company has a good product pipeline and has also been investing in various distribution channels to service the demand all across geographies. We are well poised to effectively capture the growth opportunities in the FMCG domain.

      9. RISKS AND CONCERNS
      10. The Company is well aware of these risks and challenges and has put in place mechanisms to ensure that they are managed and mitigated with adequate timely actions. One of the key risks faced by the Company in todays scenario is the continued inflationary trend which is not only increasing cost pressures, but may also lead to demand compression for its products. Increase of imitation/fake products and brands can hamper our growth. The input Cost Pressures were managed effectively and the Company did not take any significant price increases during the year. Growth rates across quarters have been consistent and reflect your companys sound business strategies and strong execution capabilities. A slowdown in overall economic growth can lead to pressure on disposable incomes and spending power of people.

        To overcome the hurdles posed by a challenging external environment, Company has been taking proactive measures in portfolio, product and channel optimization. The focus of the Company is on ensuring deeper penetration and more effective distribution of products. Company is committed to its motto of being dedicated to the health and well-being of every household. With a legacy and experience, company is today trusted healthcare brand and Ayurvedic and Natural Health Care Company.

        The Company increased its efforts to improve productivity by deploying various cost reduction and energy saving initiatives, resulting in a reduction in manufacturing costs to lower levels.

      11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
      12. Your Company has a proper and adequate system of internal control including internal financial controls. Your Company has an Audit Committee headed by a non-executive independent director, inter-alia, to oversee your Companys financial reporting process, disclosure of financial information, and reviewing the performance of statutory and internal auditors with management. The internal control system, including internal financial controls of the Company, is monitored by an independent internal audit team, which encompasses examination/ periodic reviews to ascertain adequacy of internal controls and compliance to Companys policies. Weaknesses noted along with agreed upon action plans are shared with audit committee, which ensures orderly and efficient conduct of the business and effectiveness of the system of internal control. The audit function also looks into related party transactions, preventive controls, investigations, as well as other areas requiring mandatory review per applicable laws. The powers of the Audit Committee, inter-alia, include seeking information from any employee, obtaining outside legal or other professional advice, and investigating any activity of the Company within the committees term of reference. Your Companys internal audit department verifies the information of the financial statements as well as the compliance with your Companys policies to maintain accountability and ensuring controls are in place to safeguard of all its assets and correctness of accounting records. The internal audit department shares regular updates regarding the work done, coverage, weaknesses noted and other relevant issues with appropriate management levels including Audit Committee. Observations/ weaknesses noted from time to time are suitably acted upon and followed up at different levels of management. The internal control is supplemented by an extensive program of audits and periodic review by the management.

      13. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
      14. During the year under review, the turnover of the Company is Rs. 618.01 Lakhs in comparison with the last years Rs. 618.92 Lakhs. The profit after tax of the company is Rs 40.56 Lakhs. Despite high inflationary and cost pressures throughout the year, company capitalized on every available opportunity and undertook strategic initiatives coupled with to exploit the full industry potential, besides making efforts towards cost reduction and improved efficiency which enable the company to grow reasonably well.

        In continuation of its efforts towards offering innovative, more effective and value added products to the consumers for providing them with value for money. Company continued combining traditional Ayurvedic Science with adoption of the modern manufacturing technology.

      15. HUMAN RESOURCESAND INDUSTRIAL RELATIONS
      16. ‘Humankind is the Greatest Resource

        The Companys endeavour has always been to build an organization where its people are always engaged and empowered to do their best. The Companys culture is focused on customer-centricity collaborative team work, result orientation, entrepreneurial mindset and developing people.

        Owing to the competitiveness and diversity of Indian markets, the Company strives to ensure adequate succession planning of its leadership talent pool. In line with the Companys focus on employee empowerment, it has also designed new ‘Ways of Working to deliver high operational excellence and governance.

        To remain competitive, improving employee productivity is of utmost importance to the organization and the company strive to achieve benchmark performance in this area. During Financial Year 2022-23, the overall Employee Productivity for the Company increased.

        The Company recognizes and appreciates the contribution of all its employees in its growth path. Our Company strives to retain talent by facilitating career growth through job enrichment and empowerment, as it believes that the pool of the human resource is the biggest asset of the organization. Your Company maintains a cordial relationship with its employees through a constructive work environment in support of productive gains

      17. KEY FINANCIAL RATIOS/ACCOUNTING RATIOS
      18. Following are important ratios comparing performance of financial year ended on 31.03.2023 and financial year ended on 31.03.2022:

        Ratio Analysis

        S. No.

        Particulars Formula

        Calculation 22-23

        Ratio

        Calculation 21-22

        Ratio

        1

        Current Ratio

        Current

        Assets

        49902638

        2.056

        55033844

        2.189
        Current Liabilities 24267820

        25133646

        2

        Debt Equity Ratio Debt 41782853

        0.457

        43261879

        0.466
        Equity 91346230

        92851258

        3

        Return On Equity Pat 4056551

        0.044

        4813197

        0.052
        Total Equity 91346230

        92851258

        4

        Inventory Turnover COGS 27499941.03

        3.407

        28762454

        3.742
        Average Inventory 8070542

        7685936

        5

        Trade Receivable Turnover Credit Sales 53678767

        1.473

        51145900

        4.055
        Average Trade Receivable

        36442549

        12611318

        6

        Interest Service Coverage Ratio EBDITA 13297825

        0.295

        11958249

        0.262
        Principle + Interest 45119165

        45565843

        7

        Trade Payable Turnover Ratio

        Credit

        Purchase

        24883815

        1.095

        24490751

        4.055
        Average Trade Payable

        22731220

        6038815

        8

        Net Capital Turnover Ratio

        or Net Assets Turnover Ratio

        Sales/COGS 61801377.62

        0.676

        57127861

        1.911

        Net Assets

        91346230

        29900198

        9

        Net Profit Ratio Net Profit 4056551

        0.066

        4813197

        0.08
        Sales 61801377.62

        51145900

        10

        Return On Capital Employed EBIT 8885269

        0.067

        8006804

        0.059
        Capital Employed 133129084

        136113139

        11

        Return On Investment Net Profit 4056551

        1.287

        4813197

        0.103
        Total Investment 3151030

        46631740

        * Inventory Turnover Ratio and Trade Receivable turnover Ratio change due to excessive inventory, change in trade payable turnover ratio due to pay off more than money generated, change in net capital turnover ratio and net profit ratio due to increase in inventory, return on capital employed change due to change in profitability.

      19. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report describing the DeshRakshak objectives, projections, estimates and expectations might be construed as ‘forward looking statements within the meaning of applicable laws and regulations.

Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downward trend in the FMCG industry, rise in input costs, exchange rate fluctuations and significant changes in political and economic environment, environment standards, tax laws, litigation and labour relations.

To ensure our Long term corporate success, company implements risk management system which includes recording, monitoring and controlling internal enterprise business risks and addressing them through informed and objective strategies.