Dhanlaxmi Cotex Management Discussions


Your Directors are pleased to present the Management Discussion and Analysis Report for the year ended 31st March, 2023.

The Policymakers over the world are currently facing a predicament. The last two years have seen the global economy struggling to deal with overlapping crises, the latest being the liquidity troubles after a series of global bank crises. While the impact appears to have been contained, these uncertainties continue to undermine the confidence among consumers and businesses to spend, therefore impacting economic growth.

The World Bank now fears that the ongoing slump in global economic growth will likely result in a "lost decade." Despite this gloom, many market analysts believe that this could well be Indias decade. And there are enough reasons and data to back this claim. Recent data revisions by India suggest the economy has fared better than previously believed despite continuing global uncertainties. The International Monetary Fund (IMF) expects India to grow by 5.9% in FY 2023-24 and by an average rate of 6.1% over the next five years.

However, capital investment, especially in the private sector, has lagged so far. India is an attractive investment destination is a point well emphasized. The question is, why has private investment not yet picked up sustainably, and what can policymakers do to take advantage of this window of opportunity?

Our overall outlook for the Indian economy remains positive: We expect investments to see a turnaround and thrust the economy into sustainable growth. India will likely grow at a moderate pace of 6.0%-6.5% in FY 2023-24, as the global economy continues to struggle. Growth in the next year will likely pick up as investments kick start the virtuous circle of job creation, income, productivity, demand, and exports supported by favorable demographics in the medium term.

It looks like the world has come out of the shadow of the pandemic and has, in fact, learned to live with it. However, geopolitical crises, supply chain reorientations, global inflation, and tight monetary policy conditions will weigh on the outlook. We have delved into these challenges in detail in our previous outlooks.


A. Global Economy

With the prolonged conflict between Russia and Ukraine, the global economy is currently witnessing a slowdown and uncertainty, resulting in rising inflation and financial sector stress. In order to limit inflation, monetary policies have been tightened. Unfortunately, this has resulted in a quick spike in fuel and food prices, hitting vulnerable populations in low-income countries disproportionately. The International Monetary Fund (IMF) forecasts 3.0% global growth in fiscal year 2024. China, as the worlds second-largest economy and most populous country, has a significant impact on the global economy. Its economic performance has far-reaching ramifications for other countries and the global economy. Despite rising inflation, consumer spending in the United States remains stable, while expenditure on goods has fallen for the third consecutive quarter.

B. Indian Economy

The Indian Economy witnessed a remarkable recovery in the post-Covid environment and delivering one of the best performances in terms of economic output. The Indian economy remained remarkably resilient to the external environment owing to ongoing policy reforms and prudent regulatory measures which ensured strong macroeconomic fundamentals and helped the country navigate global and domestic challenges. Expansion of manufacturing footprint by both global and Indian firms, aided by Government policies and higher government spending on infrastructure sector supported investment growth during the year.

Strengthening of Indias digital infrastructure in the last few years and the widespread adoption of real-time digital payments also contributed to the growth of the country. However, monetary tightening by the RBI, widening of current account deficits and decline in growth of exports capped economic growth prospects.

Inflation headwinds were also felt by the Indian economy with increase in crude oil prices. While Indias retail inflation rate peaked at 7.8% in April 2022, above the RBIs upper tolerance limit of 6%, the overshoot of inflation above the upper end of the target range in India was however one of the lowest in the world. FY 2023 saw the trade sector make a robust return expanding to 15%. Agriculture sector was steady having growth of 3.8% compared to 3.0% in FY 2022. The Financial, Real Estate and professional services showed significant growth in FY 2023 compared to 4.2% in FY 2022.

The Russian invasion of Ukraine started on February 2022. The world thereafter had to deal with disruptions in food and energy supplies of a magnitude which was not experienced in recent memory. The impact on India remained marginal, mainly on account of the astute foreign policies and efficient food grain distribution by the government. Consequently, in India, large & small companies and the services sector has not been substantially negatively impacted. Even so, the year FY 2022-23 recorded a lower earnings growth for the Nifty 50 companies than what was estimated by analysts at the beginning of the financial year. The Nifty 50 recorded an approximate fall of 2.5%, but showed impressive resilience given the global circumstances & food grain distribution.

As for India, it remains a bright spot and we remain optimistic that in Indian equity indices may record double-digit returns in FY 2023-24. Your Companys portfolio is a mix of listed equities, and fixed income securities. Thus, even in a turbulent year gone by your Companys Total Equity per Share has remained at the same levels as that in previous year.


The Management Discussion and Analysis have been included in consonance with the Code of Corporate Governance as approved by The Securities and Exchange Board of India (SEBI). Investors are cautioned that these discussions contain certain forward looking statements that involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy. The company undertakes no obligation to publicly update or revise any of the opinions or forward looking statements expressed in this report consequent to new information or developments, events or otherwise.

The management of the company is presenting herein the overview, opportunities and threats, initiatives by the Company and overall strategy of the company and its outlook for the future. This outlook is based on managements own assessment and it may vary due to future economic and other future developments in the country.

The operational performance and future outlook of the business has been reviewed by the management based on current resources and future development of the Company.

In nominal terms, 2022-23 was a decent year for BSE Sensex as the index closed 422.9 points higher on March 31, 2023 from a year ago. In percentage terms, the Sensex moved higher by only 0.7% in 2022-23, the worst performance in the past three years. To be sure, the stock market saw a lot of volatility through the year. It had a poor performance in the first half of the fiscal 2022- 23, gained momentum in the second half and suffered heavily after the release of Hindenburg report on Adani Group of Companies on February 1. BSE Sensex lost 745.9 points in the month of February. However, the market recovered in March to close higher than last years value.

Your Company is primarily engaged in dealing in securities and investments. As per the Survey report tabled by the Union Minister for Finance & Corporate Affairs Nirmala Sitharaman in Parliament. The Survey observes that Indias capital markets had a good year despite global macroeconomic uncertainty, unprecedented inflation, monetary policy tightening, volatile markets, etc.

This year also saw the largest IPO ever in the history of India - in May 2022, the Central Government diluted its stake in the Life Insurance Corporation (LIC) of India and listed it on the stock exchanges, thereby making LICs IPO the largest IPO ever in I ndia and the sixth biggest IPO globally of 2022.

In April-November 2022, the under activity in public debt issuances was more than compensated by private debt placements.

The number of private debt placements increased by 11 per cent from 851 to 945, while resources mobilized increased by 6 per cent in April-November 2022, compared to the corresponding period in the year before.

Regarding performance of the stock market, the Survey states that the Indian stock markets witnessed a resilient performance, with the blue chip index Nifty 50 registering a return of 3.7 per cent during April-December 2022.

This is despite the decline in global stock markets because of geopolitical uncertainties, supply chain disruptions post Russia- Ukraine crisis.

Even among major emerging market economies, India outperformed its peers in April-December 2022.

According to the statistics by the Futures Industry Association (FIA), a derivatives trade association, the National Stock Exchange of India Ltd. (NSE) emerged as the worlds largest derivatives exchange in 2020 in terms number of contracts traded. NSE was ranked 4th worldwide in cash equities by number of trades as per the statistics maintained by the World Federation of Exchanges (WFE) for CY2020. India is expected to have 6.11 lakh HNWIs in 2025.

The Company remains fully compliance with the guidelines and direction of both Central and State Government. The situation has caused uncertainty and impacted the collection and other operations of the Company. However with various remote working measures, the Company has been able to restore its normal operations except certain functions which require physical movement e.g. field level visits.

The Company has sufficient working capital to meet financial requirements. Though the cash position was challenging, with our limits and tight control over expenditure, the company will be able to serve its debt and other financing arrangement.

The Company has taken Cash flow control and overhead control measures to manage the operations, weekly review mechanism adopted to review accounts receivables and measures.

Your Company has realized gains at opportune times and reinvested the same in other asset classes and equities. The income earned from dividends grew substantially in FY 2022-23 from 49.71 lacs to 86.20 lacs.



Initial Public Offerings (IPOs) are a great way for companies to raise capital and expand their businesses. In 2023, many companies are expected to go public, and this could create a positive impact on the stock market. Investors can expect to see promising returns from IPOs of companies that have strong growth potential.

Greater Foreign Investments

Foreign investments play a crucial role in the Indian stock markets growth, and 2023 is expected to see a surge in foreign investments. The governments focus on ease of doing business, a stable political environment, and promising economic growth are likely to attract foreign investors to the Indian stock market. While the predictions seem positive, investors must remember that the stock market is volatile and unpredictable. Its essential to have a diversified portfolio and invest in stocks that have a strong growth potential. Investors should also keep an eye on global economic conditions and the government policies that impact the stock market.

Bullish Market Outlook

Most experts predict a bullish market outlook for the Indian stock market in 2023. Positive economic growth and government policies are expected to drive up stock prices. Additionally, the low-interest rates and ample liquidity are expected to attract investors toward equities. The return on foreign investments is also expected to further fuel the markets growth.

The Growth of Emerging Sectors

The Indian economy is evolving, and several emerging sectors like e-commerce, healthcare, and technology are gaining momentum. The increasing adoption of digital technologies and e-commerce platforms is expected to drive growth in these sectors, and investors are likely to see promising returns in these areas.

Boost in Infrastructure Development

The governments focus on infrastructure development is expected to create a positive impact on the stock market. The initiatives like the National Infrastructure Pipeline and the Atmanirbhar Bharat Abhiyan are expected to create opportunities for companies in the infrastructure and construction sectors. This, in turn, is expected to drive up the stock prices of these companies.


Indias higher valuation compared to the rest of the world which had peaked at 110% compared to EM, and 60% compared to MSCI World and now stands at a low 60% and 20% premium respectively which could be justified.

The world is probably undergoing a Risk ON trade since the interest rate hikes are largely behind us, with the possibility of one more hike in May; and 2H2023 could see rate cuts. This PIVOT is leading to investors betting on relatively riskier economies with a view they may jump back faster.

The failure of Silicon Valley Bank and two other regional banks; along with CS being bailed out by UBS has led to the US government increasing their Debt by almost US$ 400 Bn in the month of March to arrest the economic downturn.

So though Money supply Growth being flat is the lowest growth in 15 years; the 2-year and 10-year interest rate in the US after peaking to 5% and 4% respectively has fallen to 4% and 3.5% suggesting a possibly lower recession in the US but an imminent one. The consequences of the above action would be falling inflation and falling Global demand and cut in earnings estimates which have already started.

GDP globally is projected to grow at just 2.6% in 2023E (Source- IMF data) the weakest since 93 excluding the Pandemic and GFC. Chinas early reopening and resilience in European data should help strengthen global growth however the US slipping into recession in H2 -23 could be a bigger concern. Indias growth is relatively resilient so far and the external risk has receded.

The Indian high-frequency data though softened in the last few months still remains robust especially for the domestic side.

The Indian banking sector credit growth of 15%+ though lower than its peak of 17% much higher than the average growth of 11% India has witnessed in the last 5 years (Source- Co data, JMFS); and a recent pick up in the deposit rates to over 10% along with constant retail demand as showcased in credit card sales are key positives.

1) Risks and concerns

The Company is now concentrating on investment and trading in Securities. Competition in the market continues to have an impact on the Companys operational performance and also exerts pressure on the margins. The Company has exposures in stock market. DCL are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, high volatility risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

Market Risk: The Company has quoted investments which are exposed to fluctuations in stock prices. GCM continuously monitors market exposure in equity and, in appropriate cases, also uses various derivative instruments as a hedging mechanism to limit volatility.

Liquidity And Interest Rate Risk: The Company is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Management team actively manages asset liability positions in accordance with the overall guidelines laid down by various regulators. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Companys business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Companys control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility.

The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.


The Companys operating and business control procedures have been framed in order that they ensure efficient use of resources and comply with the procedures and regulatory requirements. The company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorized, recorded and reported correctly.


The Company believes that the human resources are vital resource in giving the company a competitive edge in the current business environment. The companys philosophy is to provide congenial work environment, performance oriented work culture, knowledge acquisition/ dissemination, creativity and responsibility. As in the past, the company enjoyed cordial relations with the employees at all levels.

The Company continues to accord the highest priority to health and safety of its employees and communities it operates in. The Company has been fully committed to comply with all applicable laws and regulations and maintains the highest standard of Occupational Health and Safety and ensures safer plants. We believe in good health of our employees.

Further, to prevent the spread of pandemic Covid-19, the Company has taken all precautionary measures required, such as social distancing, use of masks and sanitizers etc., at all its plant and construction sites as well as at office locations. Your Company is in full compliance of all Government directives issued in this behalf.


As there are no subsidiaries of the Company, Investment made in Subsidiaries is NIL.


The Company operates in single reported segment with main business of Finance and Share Trading activity.


During the year under review, the performance of the Board & Committees and Individual Director(s) based on the below parameters was satisfactory:

(a) Most of the Directors attended the Board meeting;

(b) The remunerations paid to executive Directors are strictly as per the company and industry policy.

(c) The Independent Directors only received sitting fees.

(d) The Independent Directors contributed a lot in the Board and committee deliberation and business and operation of the company and subsidiaries based on their experience and knowledge and Independent views.

(e) Risk Management Policy was implemented at all critical levels and monitored by the Internal Audit team who places report with the Board and Audit committee.


In accordance with the amended SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof:

The Company has identified following ratios as key financial ratios:

Ratio Analysis Numerator Amt (In Lakh) Denominator Amt (In Lakh) 31.03.2023 31.03.2022 Remark
Current Ratio Current 3,291.45 Current 80.27 41.01 31.70 The variance is due to
Assets Liabilities increase in trade receivable, during F.Y. 2021- 22, the Trade Receivable were almost Nil compared to the F.Y. 2022- 23.
Debt Equity Ratio Total Liabilities 74.71 Shareholder s Equity 4,937.64 0.02 0.01 The variance is due to increase in trade payables, during F.Y. 2022-23, as compared to the F.Y. 2021-22.
Debt Service Coverage Ratio Net Operating Income 35.97 Debt Service 5.64 6.38 63.46 The variance is due to decrease in profits during F.Y. 2022-23.
Return on Equity Ratio Profit for the period 35.60 Avg. Shareholders Equity 4,781.57 0.01% 9.41% The variance is due to decrease in profits during F.Y. 2022-23.
Inventory Turnover Ratio Cost of Goods sold 1,886.69 Average Inventory 2,759.78 0.68 0.73
Trade Receivables Turnover Ratio Net Credit Sales 2,373.19 Average Trade Receivables 24.09 98.50 N.A
Trade Payables Turnover Ratio Total Purchases 2,540.50 Average Trade Payables 47.30 53.71 0.00 The variance is due to Increase in trade payables during F.Y. 2022-23 as compared to F.Y. 2021- 22.
Net Capital Turnover Ratio Net Sales 2,373.19 Average Working Capital 3,211.18 0.74 0.69
Net Profit Ratio Net Profit 23.69 Net Sales 2,373.19 1.00% 17.23% The variance is due to decrease in profit for the F.Y. 2022-23.
Return on Capital employed EBIT 35.51 Capital Employed 4,937.54 0.72% 8.36% The variance is due to lower earnings for the F.Y. 2022-23.
Return on Investment Return/Prof it/Earnings 150.95 Investment 1,648.45 9.61% 13.49% The variance is due to decrease in profit for the F.Y. 2022-23.


The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.


The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

By Order of the Board of Directors
Sd/- Sd/-
Mahesh S. Jhawar Rahul M. Jhawar
(Whole Time Director) (Director)
DIN: 00002908 DIN: 07590581
Place: Mumbai
Date: 14/08/2023