Hit Kit Global Solutions Ltd Management Discussions.

Annexure 6 Pursuant to Schedule V of the SEBI (LODR) Regulations, 2015

The communication straight from the management to the shareholders of the company giving them insights into the present business conditions of the company and its future potential and to give a birds eye view about the entire business ecosystem of the company.

A. Industry structure and developments

Introduction:

Almost everything we use in our daily lives and the things we need for our house and for ourselves that are brought from the retail stores. Retailing in India is one of the important pillar of its economy and accounts for about 15 percent of its Gross Domestic Product.

The Indian retail industry is the fifth largest in the world.

Meaning of "Retailing":

The word Retailing is defined as "The set of business activities that adds value to the products and services sold to consumers for their personal or family use". Retailing can be referred to all activities involved in marketing and distribution of goods and services.

Structure of the retail sale of vegetables and consumables in India:

Three distinct types of retailing are carried on in India:

1 .Sale by vegetable vendors - where vendors directly sell vegetables to the consumers catering to their locality which is falling under unorganized sector.

2. House to house selling - in which vegetable hawkers go to the homes of consumers.

Company has developed a concept of vegetable supply chain by procuring in bulk on daily basis the vegetables from APMC wholesale market, Vashi and selling them in smaller lots to vegetable vendors who directly sell vegetables to the consumers by catering to their locality across Mumbai. Company has a USP of a unique supply chain of vegetables in the unorganized sector.

3. E-Commerce - mail order selling in which various vegetables and consumables through internet marketing and home delivery to the consumers.

Economic outlook of Retail & Tourism

Looking at the economic growth of the Tourism Industry, the company continued to scale down the business operations of vegetable retail supply chain by consolidating the operations and are engaged in the development of Resort Project near Lonavala under the Joint Venture, having 40% stake, and the Joint Venture is making pursuit to obtain required permissions from forest department and Land Use approval for the resort project.

The Monsoon Lake was scheduled for commencement of operations in the forthcoming monsoon season beginning from June 2020, but due to outbreak of pandemic COVID 19 in the month of March 2020, the Trial Run of the Monsoon Lake was not feasible under the lockdown restrictions. Consequently as per the Term Sheet, the Company has charged penal interest @ 20%p.afor the delay and earned Other Income of Rs. 17.99 Lakhs.

The ongoing pandemic, travel restrictions, and the country wide lockdown have brought the entire tourism industry to a standstill, and unlike other sectors, tourism will take longer to recover, especially leisure tourism.

B. Future outlook postCovid-19

Covid-19 has been humanitys biggest disruptor of life and businesses is an understatement. In the context where the online and multi-channel impact were being seen across the world on physical retails including malls, the corona scare might become a game changer with regard to retail across the world. In short, the future is not easy to predict, even though a lot of reports about retail are doing the rounds.

Supply chain and inventory impact: While some of the categories would be affected by the inventory pile-up due to the lockdown, several other categories might end up running into severe supply issues and therefore stock out situations, as manufacturing is almost at a standstill for various categories.

Working capital impact: Retail is essentially about the fast rotation of working capital, which is inventory. Clearly the inventory status is going to affect this in a significant manner.

Consumers behaviour effect: Panic buying has been seen for essential products. However, essential products have various categories and the consumption of these is not uniform. Some of them might even see a spurt in sales while many categories might witness muted sales.

Tourism, which contributes 5.06 per cent in Indias GDP is one such industry which has been ignored in this recovery. The sector also has strong forward and backward linkages to other sectors such as agriculture, transport, handloom, and FMCG to name a few. Disruptions in tourism sector will render many people in unemployed. The food and hospitality sector is already reeling under pressure from high fixed costs and no footfalls. FAITH, a policy federation of associations of tourism and hospitality industry has estimated a loss of Rs 10 lakh crore for the industry due to COVID-19. This will also impact inflow of foreign tourists, which means a drastic fall in foreign exchange earnings which was close to Rs 2,10, 981 crore in Q1-Q3 2019. India is yet to address the concerns of the tourism sector.

C. Financial Performance with respect to operational performance

The Company has prepared financial statements for the year ended March 31, 2020 in accordance with Indian Accounting Standards (Ind AS) notified by the Ministry of Corporate affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended till date) together with the comparative period data as at and for the year ended March 31,2019.

Revenue from Operation:

During the financial year 2019-20 the company earned Gross Revenue from operation of Rs. 17.79 Lakhs as against Gross Revenue from operation of Rs. 20.81 Lakhs during the financial year 2018-19.

Other Income:

During the financial year under discussion the company earned Gross other income of Rs. 17.99 Lakhs as against Gross other income of Rs. 10.83 Lakhs during the financial year 2018-19.

Expenditure:

Company has incurred total expenses of Rs. 34.78 Lakhs as against Rs. 33.94 Lakhs in the previous year.

Total Comprehensive Income:

The total comprehensive income of the company for the financial year under review was Rs. 1.02 Lakh as against Rs. (2.30) Lakhs during the previous financial year 2018-19.

Shareholders Fund

Details Pertaining to the shareholders fund of the Company are as follows:

Shareholders Fund As on 31.09.2020 (INR) Shareholders Fund As on 31.09.2019 (INR)
INR 9,68,46,412 INR 9,67,44,125

D. Opportunities and Threats

An increasing number of Indian consumers are ascending the economic pyramid to form an emerging customer base. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working women population and emerging opportunities in the services sector are going to be the key factors in the growth of the organized Retail sector in India. The growth pattern in organized retailing and in the consumption made by the Indian population will follow a rising graph helping the newer businessmen to enter the India Retail Industry.

Lack of the infrastructure and guaranteed supply chain that most big retailers require, such as storage, transportation, warehousing and information systems, they have to build it themselves. This is a vulnerable area for retailers and there are many ways in which suppliers and distributors can abuse retailers.

The ongoing pandemic, travel restrictions, and the country wide lockdown have brought the entire tourism industry to a standstill, and unlike other sectors, tourism will take longer to recover, especially leisure tourism.

E. Risk and Concern

The decline in consumer spending is the greatest danger facing retail stores, as it has a material impact on cash flows, which in turn affects the day-to-day operations. any shortcomings in consumer satisfaction may quickly impact reputation and hence its revenue.

Lack of goods to display is a sensitive issue for day-to-day operations and can result from a failure in the supply chain.

The ongoing pandemic, travel restrictions, and the country wide lockdown have brought the entire tourism industry to a standstill, and unlike other sectors, tourism will take longer to recover, especially leisure tourism.

F. Internal Financial Control Systems and Adequacy

Adequate internal controls, systems, and checks are in place, commensurate with the size of the Company and the nature of its business. The management exercises financial control on the Companys operations through monitoring and standard operating procedures.

G. Cautionary Statement

The above Management Discussion and Analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding a fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward looking statements made from time to time on behalf of the Company.