Heads UP Ventures Ltd Management Discussions

Global Economy

According to IMF World Economic Outlook (Apr-2024), Economic activity was surprisingly resilient through the global disinflation of 2022–23. As global inflation descended from its mid-2022 peak, economic activity grew steadily, defying warnings of stagflation and global recession. Growth in employment and incomes held steady, reflecting supportive demand developments including greater than expected government spending and household consumption and a supply-side expansion amid, notably, an unanticipated boost to labour force participation. The unexpected economic resilience, despite significant central bank interest rate hikes aimed at restoring price stability, also reflects the ability of households in major advanced economies to draw on substantial savings accumulated during the pandemic. The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the COVID-19 pandemic and Russias invasion of Ukraine, weak growth in productivity and increasing geo-economics fragmentation. Global headline inflation is expected to fall from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. The latest forecast for global growth five years from now at 3.1 percent is at its lowest in decades.

Risks to the global outlook are now broadly balanced. On the downside, new price spikes stemming from geopolitical tensions, including those from the war in Ukraine and the conflict in Gaza and Israel, could, along with persistent core inflation where labor markets are still tight, raise interest rate expectations and reduce asset prices. A divergence in disinflation speeds among major economies could also cause currency movements that put financial sectors under pressure.

Monetary policy remains focused on aligning inflation with the target to pave the path for sustained growth in the medium term.

Indian Economy

According to RBI, Domestic economic activity continues to expand at an accelerated pace, supported by fixed investment and improving global environment. The second advance estimates (SAE) placed real GDP growth at 7.6 per cent for 2023-24, the third successive year of 7 per cent or higher growth. From the supply side, industrial activity led by manufacturing continued its momentum. The purchasing managers index (PMI) for manufacturing displayed a sustained expansion in February-March, touching a 16-year high in March. The services sector exhibited broad-based buoyancy with all sectors registering strong growth. The PMI services remained above 60 during February-March, suggesting sustained healthy expansion.

Indian Retail

Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. It accounts for over 10% of the countrys gross domestic product (GDP) and around eight % of the employment. India is the worlds fifth-largest global destination in the retail space. The sizeable middle class and nearly unexplored retail market in India are the main enticing factors for international retail behemoths seeking to move into newer markets, which will help the Indian retail business grow more quickly. The urban Indian consumers purchasing power is increasing, and branded goods in categories like apparel, cosmetics, footwear, watches, beverages, food, and even jewellery are gradually evolving into business and leisure that are well-liked by the urban Indian consumer. The retail sector in India is expected to reach a whopping US$ 2 trillion in value by 2032, according to a recent analysis by the Boston Consulting Group (BCG).

Online penetration of retail is expected to reach 10.7% by 2024 versus 4.7% in 2019. By 2024, Indias e-commerce industry is expected to increase by 84% to US$ 111 billion, driven by mobile shopping, which is projected to grow at 21% annually over the next four years.

Indias retail sector was experiencing exponential growth with retail development taking place not just in major cities and metros, but also in small cities. Healthy economic growth, changing demographic profile, increasing disposable income, urbanization, and changing consumer tastes and preferences have been some of the factors driving growth in the organized retail market in India.

Review of Companys Business Operations, Opportunities and Threats/Risks and Its Mitigation

During the FY 2023-24, the Company has developed a new range of products in fashion apparels and accessories business including T-shirts, Caps, Hats, socks, Underwear and such different categories of products. The Company has also launched its own website www.hupessentials.com and activated social media handles in the last quarter of the financial year and started selling the inventories designed and manufactured. The Company has entered into an outright purchase agreement with Reliance Retail Limited for the sale of the fashion apparel and accessories under the brand "HUP" on their e-commerce platform.

As the Company is in the process of establishing the brand across all channels, an inherent risk of new business operations becoming futile is the ultimate risk which the Company is facing. As there were no business operations during the FY 2023-24, the details pertaining to segment-wise revenue could not be provided.

Establishing a non-celebrity brand within an increasingly saturated market characterized by intense brand rivalry, surplus supply pressures, online platform discounts, elevated procurement costs, and operational challenges presents a significant challenge for the company. The company is dedicating considerable efforts toward producing high-quality goods at affordable prices. It anticipates receiving constructive responses regarding its existing product inventories, which will serve as a foundation for refining its market penetration strategy. This involves devising plans for enhanced procurement to amplify production volume and expand the reach of the brand.

Performance Review

During the year, we achieved sales of Rs. 78.96 lakh, reflecting a (decline of 48% over Rs. 151.07 Lakh in FY23. Net loss after tax stood at Rs. 431.79 Lakh, as compared to net loss of Rs. 965.52 Lakh in FY23.

( in lakh, except earnings per share)

Particulars	Year ended
	31 .03.2024	31.03.2023
Total Income	78.96	151.07
Net Profit/(Loss) for the Period before tax	(431.79)	(974.99)
Net Profit / (Loss) for the Period after tax	(431.79)	(965.54)
Total Comprehensive Income for the Period (Comprising Profit / (Loss) for the period (after tax) and Other Comprehensive Income (after Tax)	(421.59)	(962.02)
Equity Share Capital	2208.26	2208.26

Human Assets

Our people are at the heart of everything we do and we implement a variety of initiatives to augment their operational capabilities. As on 31^st March, 2024, our workforce strength is recorded at 12 (excluding the Executive Directors of the Company).

Internal controls and their adequacy

We have set up a comprehensive system of internal controls, along with a structured internal audit process, vested with the task of safeguarding the assets of the organisation, and ensuring reliability and accuracy of the accounting and other operational data. Internal audit is conducted for all the processes to identify risks and verify whether all systems and processes are commensurate with the business size and structure. These internal controls are verified by the Audit Committee to monitor existing systems and take corrective measures, wherever required.

Key Financial Ratios

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, including:

Ratio	31st March 2024	31st March, 2023	Variance
1 Current Ratio	6.85	6.71	2%
2 Return on Equity Ratio	(30.97)	(53.18)	42%
3 Trade Receivables Turnover Ratio	0.18	0.15	20%
4 Trade Payables Turnover Ratio	2.56	1.19	115%
5 Net Profit Ratio	(671.28)	(1314.03)	49%
6 Return On Capital Employed	(65.73)	(50.47)	30%

Note: Kindly refer Note No.36for major variations in the Ratio Figures in brackets represent negative number.