Gratex Industries Ltd Management Discussions

The Management Discussion and Analysis Report have been included in adherence to the spirit enunciated in the code of Corporate Governance approved by the Securities and Exchange Board of India (SEBI) and in compliance with the provisions of the Listing Agreement.

1. Industry Overview:

It has been a challenging year with several macro headwinds encompassing the Industrial, infrastructure and Real estate market. Slow economic activity and liquidity challenges impacted the overall demand scenario in the industry. The unprecedented outbreak of Coronavirus and subsequent lockdown has severely impacted supply chains as well as consumer sentiment.

Even though the threat of Covid 19 as a disease has gone away but it has left its long term adverse effect on the economy in general which is taking time to recover. However, the management is making sure that the organization remains fully energized during the period and ready to bounce back on the next opportunity.

The year has been one of consolidation and solidifying our situation which was adversely affected during the pandemic. The management expects that these are challenges which will impact 2024-25 as well but beyond that thing should normalize. We continue to pursue our long-term growth strategy and are confident to lead the recovery in a shorter period in the post pandemic phase and strive to sustain profitable growth.

2. Opportunities and Threats:

The Indian mindset has still not grasped the concept of wallpaper. Traditionally the Indian customer is largely dependent on using paint for preventing staining and peeling of walls and giving the home a fresh and new look. The use of wallpapers is very low against use of paint in most Indian homes. This conservative outlook coupled with the low-cost paints available in the market poses a serious threat to the Wallpaper industry. The influx of cheap low graded wallpapers especially from China also adds as a severe threat meant to disrupt the wallpaper industry.

3. Risk Management and Compliance:

Gratex Industries Ltd has established a Risk Management Framework under which all the risks covering the entire spectrum of operation are listed and categorized into high, medium and low risks. All the risks are discussed in the Senior Management Committee meetings periodically to ensure that the risk mitigation plans are well thought out and implemented and adverse impact of risks is avoided or kept within manageable proportions.

An internal check process is in place to prevent and limit risk of non-compliance. The Company ensures compliance of all applicable laws including those relating to establishment, Taxation, Export controls, health, safety, Environment and Company laws.

The Company being a small-cap company and the conservative market in which it operates is a cause of concern from the point of view of operating profits to the Company. However, the Company enjoys a niche in the segment in which it operates for providing value added and efficient services to its clients.

4. Outlook:

Despite the reduction in turnover we have still been able to remain profitable due to various cost cutting measures across the board as well as having sustainable margins. In 2024-25 we see a growth of turnover of 30% and have bettered our infrastructure to cater to the growing demand in that sector.

We continue to remain a near zero debt company which helps us to keep our costs down during this period of consolidation.

However, the Company remains committed to achieving positive growth in the financial year 2024-25.

5. Internal Control Systems:

Internal Control is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The framework requires a company to identify and analyze risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness.

The scope of internal audit is oriented towards mitigating or eliminating risks in business processes. The Audit Committee reviews the internal audit plan, significant audit findings and sustainability of measures for corrective actions. The internal audit plan is also aimed at addressing concerns, if any, of statutory auditors of the Company.

The Companys internal controls are commensurate with its size and the nature of its operations.

6. Corporate Social Responsibility:

Gratex Industries Limited is committed to being a socially responsible corporate citizen.

GILs CSR policy aims to protect and nourish the interest of all its stakeholders and contribute for an equitable and sustainable development. Ethics, Values and Transparency are the factors which lie in all its interaction within the community.

GIL has adopted a clearly defined Occupational Health and Safety Policy.

7. Human Resources Management:

In the dynamic and competitive environment where every company has access to available resources, the Company believes that upgrading and updating the skill levels of employees are highly important for achieving continuous improvement and to stay ahead in the market. As a company it focuses on effective Human Resource Management.

The company continues to maintain cordial and healthy industrial relations and it takes pride in its record of congenial work atmosphere.

8. Disclosure of Accounting Treatment:

The Company follows Accounting Standards as prescribed by the Institute of Chartered Accountants of India (ICAI) for preparation of financial statements; there is no such other treatment for the same.

9 . Performance:

During the Financial year ended on 31^st March, 2024 the Total Revenue of the Company stood at Rs. 3,99,36,487.22/- as compared to previous financial year ended on 31^st March, 2023 of Rs. 4,25,88,717.80/-

In the following table, please find brief of Financials of the Company:

PARTICULARS	CURRENT YEAR	PREVIOUS YEAR
	31.03.2024	31.03.2023
Total Income (including Other Income)	39,936,487.22	42,588,717.80
Total Expenditureincluding Depreciation	38,703,175.63	40,346,102.56
Profit before Tax	1,233,828.59	2,252,992.24
Tax Expenses	293,515.00	374,582.00
Profit/Loss After Tax	940,313.59	1,878,410.24

10. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios:

Ratios	2023-24	2022-23	% Change
Debtors Turnover	4.8780 times	5.0334 times	-3.082%
Inventory Turnover	0.9525 times	1.2285 times	-22.4600%
Interest Coverage Ratio	16.6021	21.4784	-22.6900%
Current Ratio	5.1129	4.5778	11.6800%
Debt Equity Ratio	0.0242	0.0169	43.1100%
Operating Profit Margin(%)	3.09 %	5.29 %	"41.5200%
Net Profit Margin (%)	2.35 %	4.41 %	"46.7600%
Net Worth	Rs. 3,50,42,156/-	Rs. 3,41,01,842/-	2.7600%
Return on Net Worth (%)	2.68 %	5.51%	"51.4100%

11. Detail of any change in return on net worth as compared to the immediately previous financial year along with a detailed explanation thereof:

The return on Networth of the Company stood at 2.68% for the financial year 2023-24 as compared to 5.51% for the previous financial year 2022-23. The decrease in sales has resulted in a decrease of overall profitability thereby the return on net worth has decreased.

12. Segment –Wise performance:

1. The Sales for the period April to March 2024 is Rs. 3.99 cr as compared to Rs 4.26 cr in 2022-23 i.e. a reduction of 6%.

2. This F.Y. 2023-24 i.e. April to March 2024, we have clocked a Net Profit (NPAT) of Rs. 9.40 Lakhs (Rs. 12.34 Lakhs on NPBT) against a Net profit (NPAT) of Rs. 18.78 Lakhs (Rs. 22.53 Lakhs on NPBT) posted during corresponding period last year.

3. Our Digital Printing Sales for the period April to March 2024 is Rs.153.33 Lakhs as compared to Rs. 151.44 Lakhs in the last corresponding period. Thus a slight increase.

4. Our Catalogue Sales for the period April to March 2024 is Rs. 39.32 Lakhs as compared to Rs. 47.85 Lakhs in the last corresponding period.

5. Our MFP (Modular Furniture & Profile) sales for the period from April to March 2024 is Rs. 84.11 Lakhs as compared to Rs. 98.52 Lakhs in the last corresponding period.

6. Our Warehousing Income for the period April to March 2024 is Rs. 73.28 Lakhs as compared to Rs. 64.62 Lakhs in the last corresponding period. An increase of 14 %.

7. Our Franchisee Commission Income for the period April to March 2024 is Rs. 18.24 Lakhs as compared to Rs. 18.65 Lakhs in 2022-23.

The Company is a pioneer in the field of Wallpaper segment. Being the first to conceptualize the idea of Wallpapers, the Company is also a step ahead of its peers in the field by utilizing and putting in practice the best machinery and technology in the Wallpaper segment.

13. Cautionary Statement:

Certain statements made in the management discussion and analysis report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations whether expressed or implied. Several factors could make a significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, natural calamities over which the Company does not have any direct control.