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. Complete lockdown of the country was unparalleled to any disruption experienced in the past several decades.
Even though the pandemic is over, its lingering effect on the economy still remains. Currently there is uncertainty on the pace of recovery and should take another couple of years to fully recover. However, the management is making sure that the organization remains fully energized during the period.
In fact this year despite all the headwinds we have surpassed our pre pandemic turnover by a healthy 41% Moreover we have improved our profitability considerably and now have started to grow our reserves which will help us for our future expansion.
Even though the challenges remain, the management is confident in further growing the company and also delivering healthy profits in the coming years.
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 and the huge marketing budgets of the large paint companies, it poses a serious threat to the Wallpaper industry. The influx of cheap low graded wallpapers from China plus stocklots from Europe adds as a severe threat meant to disrupt the wallpaper industry.
The pandemic after effects though is the biggest threat as our product belongs to the discretionary spend bracket and people tend to delay their spends till the time, they are not comfortable.
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 pandemic effect on the economy we have still been able to remain grow and remain profitable due to various progressive measures taken across the board. We have increased our digital printing production capacity by 50% with addition of new machine. Our design studio has been established to belt out new designs and collections every quarter. The catalogue manufacturing and furniture manufacturing divisions have been further expanded with addition of personnel and new technology. In 2023-24 we see a growth of turnover of at least 30% over 2022-23.
We continue to remain a near zero debt company which helps us to keep our costs down.
With our reserves also increasing we hope to soon become a dividend paying company.
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 31st March, 2023 the Total Revenue of the Company stood at Rs. 4,25,99,094.80/ - as compared to previous financial year ended on 31st March, 2022 of Rs. 3,02,42,563.91/-
In the following table, please find brief of Financials of the Company:
PARTICULARS | CURRENT YEAR | PREVIOUS YEAR |
31.03.2023 | 31.03.2022 | |
Total Income (including Other Income) | 42,599,094.80 | 30,242,563.91 |
Total Expenditure | ||
including Depreciation | 40,346,102.56 | 28,858,552.81 |
Profit before Tax | 2,252,992.24 | 1,384,011.10 |
Tax Expenses | 374,582 | 392,514 |
Profit/Loss After Tax | 1,878,410.24 | 991,497.10 |
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 | 2022-23 | 2021-22 | % Change |
Debtors Turnover | 5.0334 times | 3.4578 times | 45.56 |
Inventory Turnover | 1.2285 times | 1.1206 times | 9.63 |
Interest Coverage Ratio | 21.48 | 9.20 | 133.48 |
Current Ratio | 4.58 | 5.46 | (16.12) |
Debt Equity Ratio | 0.02 | 0.04 | (50) |
Operating Profit Margin | |||
(%) | 5.29% | 4.58% | 15.50 |
Net Profit Margin (%) | 4.41% | 3.28% | 34.45 |
Net Worth | Rs. 3,41,01,842 | Rs. 3,22,29,293 | 5.81 |
Return on Net Worth (%) | 5.51% | 3.08% | 78.89 |
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 Net worth of the Company stood at 5.51% for the financial year 2022-23 as compared to Rs. 3.08% for the previous financial year 2021-22. The increase in sales has resulted in an increase of overall profitability thereby the return on net worth has increased.
12. Segment –Wise performance:
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.
By Order of the Board of Director | |
For Gratex Industries Limited | |
SD/- | SD/- |
Baldevkrishan Ramrattan Sharma | Karan Baldevkrishan Sharma |
Chairman Director | Managing Director |
DIN : 00117161 | DIN: 00117188 |
Place: Mumbai | |
Date: 30th May 2023 |
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.