Hit Kit Global Solutions Ltd Management Discussions.

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 bird’s eye view about the entire business ecosystem of the company.

A. Global Economy

The world has been fighting the COVID-19 pandemic for more than a year now, and the struggle has had deleterious economic effects. In 2020, the global economy contracted by 3.3%, the largest contraction on record, at least since World War II. Much of it was concentrated in the first half of our fiscal year FY21, as several countries enforced strict lockdowns. Economies bounced back albeit at differentiated speeds in subsequent quarters, on the back of large fiscal stimulus packages, especially in the developed countries, restocking demand after dilution of lockdowns, and improved confidence levels following the start of vaccination programmes.

As per the recent forecasts from International Monetary Fund (IMF), the US and China are expected to record a strong recovery in 2021, resulting in a net positive expansion of their economies over the 2019 levels. These two engines of growth are expected to boost demand for exports from other countries. Even the other two large economies, the EU and Japan, are expected to expand. In response to the pandemic, central banks resorted to strongly supportive monetary policies in most developed economies, causing interest rates to go down to record lows.

At the same time, another consequence of this policy has been a surfeit of liquidity. That has led to a strong rally in prices of many industrial commodities, which has also been supported by the evolving economic recovery, stimulus-related demand expectations and certain supply-side disruptions. This has caused inflationary pressures on the cost dynamic of several industries. The latest IMF forecast suggests a strong 6% growth in global GDP in 2021. But the occurrence of second and third waves of COVID in different parts of the world and reports of virus mutations have created downside risks to the outlook of a strong growth rebound. Recovery remain uneven and uncertain, with the extent of fiscal support and level of vaccination being key differentiators of the short-term economic outlook across countries.

In the previous financial year ending 31.03.2020 the Joint Venture were making pursuit to obtain required permissions from forest department and Land Use approval for the resort project. Due to Covid19 Pandemic restrictions and limitations the Joint Venture is yet to obtain the required approvals in the current financial year

The Monsoon Lake was ready for commencement of operations in the previous monsoon season beginning from June 2020, but due to continuous restrictions & limitations due to Covid 19 pandemic and in the absence of visitors in the current mason season beginning June 2021, the Company could not make any operational revenue from monsoon lake activities.

B. Indian Economy Overview

The financial year 2020-21 started amidst strict lockdowns in India with severe restrictions on travel and economic activity to contain the health emergency posed by the Covid-19 pandemic. At that time, there was an unprecedented uncertainty regarding the impact of the pandemic and most sectors other than those providing essential services saw extremely limited activity. Given its discretionary nature, the leisure travel and tourism industry was severely impacted.

Even as the economy started to open-up towards the end of the first quarter, revival in demand for leisure travel and hospitality was slow to pick-up primarily due to the perceived health risks and also because of varied movement restrictions and Covid protocols both within the States and across States.

C. Retail & Tourism Industry Overview

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

Globally, the retail industry was among the most severely impacted sectors by the pandemic and the subsequent lockdowns. Your Company was also affected by the demand compression and supply challenges during the period.

However, companies used these conditions to improve its overall competitive position in the market. This was done by driving comprehensive cost reductions, aligning the product mix with changing consumer needs and accelerating the digital transformation journey.

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.

Retail is essentially about the fast movement of working capital, which is inventory. Clearly the inventory status was affected this in a significant manner. Panic buying was seen for essential product during pandemic crisis 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.

The tourism and hospitality industries have been among the worst affected by the global pandemic. The consumer sentiment for leisure travel and vacation ownership gathered some momentum only during the second half of the year.

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

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.

D. Segment- wise Performance with respect to operational performance

The Company has prepared financial statements for the year ended March 31, 2021 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, 2020. The Company has single segment.

Revenue from Operation:

During the financial year 2020-21 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 2019-20.

Other Income:

During the financial year under 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 2020-21.

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 financial year 2019-20.

Key Financial Ratio

Ratio Formula FY21 FY20 Change Reason for Major change
Current Ratio Current Asset/Current Liabilities 0.39 0.62 37% NA
Operating Profit Margin EBIT/Total Sales 2.35% 2.81% 16% NA
Net Profit Margin PAT/Total Sales 2.36% 2.86% 18% NA
Return on Net Worth PAT/Net Worth 0.09% 0.11% -0.23% NA

Shareholder’s Fund

Details Pertaining to the shareholder’s fund of the Company are as follows:

Shareholder’s Fund As on 31.09.2021 Shareholder’s Fund As on 31.09.2020
(INR) (INR)
9,68,46,412 9,67,44,125

E. 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 workingwomen 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 a non-vigilant retailer.

F. 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. Retail business is known for intense competition due to limited barriers to entry. An increase in competition may hinder revenue growth. Lack of goods to display is a sensitive issue for day-to-day operations and can result from a failure in the supply chain.

G. 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 Company’s operations through monitoring and standard operating procedures.

H. 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 Company’s 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.