Gujarat Toolroom Ltd Management Discussions

Overview

The Company has come out of suspension in the said financial year and was also able to do some business in the said financial year. Going forward the company will try to set up a more robust agriculture business and try to maximize the business potential from the same.

According to the World Economic Situation and Prospects as of mid-2024, the world economy is now projected to grow by 2.7 per cent in 2024 (+0.3 percentage points from the January forecast) and 2.8 per cent in 2025 (+0.1 percentage points from the January forecast). On balance, the near-term economic outlook is only cautiously optimistic as economic vulnerabilities remain, amid persistently high interest rates, continuing geopolitical tensions, and increasing climate risks. Unmet revenue expectations have ushered in a new wave of pragmatism where maintaining a healthy profit margin has become pivotal for corporations due to the uncertain macro outlook. In extreme cases, organizations resorted to cost-cutting measures, such as reducing headcount and cutting discretionary spending. The global real estate sectors outlook for the financial year 2024-25 reflects a mix of opportunities and challenges influenced by economic, demographic, and technological trends. Continued urbanization, especially in emerging markets, drives demand for residential and commercial properties. Post-pandemic economic recovery boosts investor confidence and increases real estate transactions.

Indias economy continues to grow at a steady and confident pace, standing out as the fastest growing major economy in the world. Gross Domestic Product (GDP) is a measure of size and health of the economy. It is the total value of all the goods and services produced within a country. In 2024-25, real GDP growth was estimated at 6.5 per cent. The Reserve Bank of India expects the same rate to continue in 2025-26. This performance comes at a time when the global economy faces uncertainty, making Indias steady momentum all the more significant.

Supported by strong domestic demand, easing inflation, robust capital markets and rising exports, the broader economic picture is one of resilience and balance. Key indicators such as record foreign exchange reserves, a manageable current account deficit, and increasing foreign investment reflect growing global trust in Indias long-term prospects. Together, these trends show an economy that is not only expanding but doing so with strength across sectors.

Company has been incorporated in the year 1983 and currently engaged in the business of dealing in Construction Materials, Rough Diamonds & Gold, Agricultural Products, Fabrics, Shares Trading, Pharma etc.

(Rs. In Lakhs)

The Directors are under the process of exploring other avenues of diversifying into new areas of business.

Key factor in determining a companys performance is the companys ability to manage the risks in its business/environment effectively. Many risks exist in a companys operating environment, and they emerge on a regular basis, Viz Currency Risk, Commodity price Risk, Human Resource Risk. Risk management is embedded in the operating framework of your Company. Your Company believes that managing risks helps in maximizing returns. The risk management framework is reviewed periodically by the Board and the Audit Committee. Like any other industry, the retail industry is also exposed to the risk of competition, government policies, fluctuation of commodity prices, natural factors like change in climate etc.

The Company is concerned about prevailing exposure norms, financial position, entry of new players in the market, rising competition from banks & multilateral agencies, uncertain business environment, fluctuation in rupee, likely increase in cost of capital due to volatile market conditions. Further, the state of business and policy environment in the country also has a cascading effect on the interest-rate regime, cost and availability of raw materials and gestation period & capital outlays required for raw material.

• Operating in multiple sectors helps reduce dependence on a single market.

• Can shift focus depending on which sector is booming (e.g., gold in uncertain times, agri during stable growth].

• Strong demand in developing economies for construction materials, agri-products, and pharmaceuticals.

• Expanding middle classes increase consumption of fabrics and medicines.

• Online platforms enable global reach and direct-to-customer opportunities, especially for pharma, fabrics, and shares.

• Blockchain technology can enhance transparency in diamond & gold trades.

• Companies seeking new trade partners post-COVID, creating entry opportunities for agile traders.

• Nearshoring and reshoring efforts open new sourcing and supply deals.

• Rising demand for ethically sourced diamonds and gold.

• Organic and sustainable agricultural products have growing international demand.

• Many countries offer export-import benefits, tax reliefs, and subsidies in sectors like agri, pharma, and construction.

• Opportunity to form alliances with manufacturers, producers, and miners to control supply chains and increase profit margins.

• Active shares trading can capitalize on market fluctuations with proper risk management. Threats:

• High compliance burden across multiple sectors (e.g., pharma approvals, mining licenses, agri-export restrictions].

• Sudden regulatory changes can disrupt operations (e.g., gold import duties, seed export bans].

• Trade wars, sanctions, and regional conflicts can interrupt global supply chains.

• Diamond and gold markets are especially sensitive to political risks.

• Operating across borders exposes the company to FX risks, especially in commodity trading.

• Prices of rough diamonds, gold, agricultural goods, and construction materials are highly volatile.

• Sharp drops can affect margins; price spikes can affect purchasing ability.

• Any issue in logistics (e.g., port closures, shipping delays] can impact deliveries and customer satisfaction.

• High risk in pharma, fabrics, and even gold (e.g., fake bullion] which can damage brand and invite legal action.

• Diamonds and gold industries face reputational risk related to "conflict minerals."

• Agri-products face scrutiny over pesticide use and sustainability.

• Shares trading, pharma distribution, and even agri-commodities are highly competitive with thin margins.

• Bigger players can undercut smaller trading companies.

• Automation and blockchain could bypass traditional traders.

• Direct-to-consumer platforms and smart contracts reduce intermediary roles.

Your Company maintains a system of internal controls designed to provide reasonable assurance regarding the following:

• Effectiveness and efficiency of operations

• Prevention and detection of frauds and errors

• Effective use of resources

• Adherence to applicable Accounting Standards and policies

• Timely preparation of reliable financial information Internal controls and governance processes are duly reviewed for their adequacy and effectiveness on a periodical basis.

The Company has a proper and adequate system of internal control which is proportionate to its size and volume of business. The internal control system of the Company are designed to ensure that the financial and other records are reliable for preparing financial statements and other data for maintaining accountability of assets. The Company has adequate internal control procedures and has well defined business processes to ensure the efficiency and effectiveness of the efforts that go in managing various assets and interests of the Company.

The Financial Statements are prepared in accordance with Indian generally accepted accounting principles and the provisions of the Companies Act, 2013. All Income and Expenditure having a material bearing on the Financial Statements are recognized on accrual basis. The Management has taken utmost care for the integrity and the objectivity of these Financial Statements, as well as for various estimates and Judgments used therein.

The Company has 1 subsidiary as on 31st March, 2025, as described below M/s. GTL GEMS DMCC.

The Company does not have any Joint Venture within the meaning of Section 2(6) of the Companies Act, 2013.

Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Your directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year. Industrial relations were cordial throughout the year.

Statements in this Annual Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may materially differ from those expressed or implied.

For and on behalf of the Board of Directors of GUJARAT TOOLROOM LIMITED