Inflame Appliances Ltd Management Discussions

REPORT

ANNEXURE – C

The discussion hereunder covers Companys performance and its business outlook for the future. This outlook is based on assessment of the current business environment and Government policies. The change in future economic and other developments are likely to cause variation in this outlook.

The Managements views on the Companys Performance and outlook are discussed below:

ECONOMIC OVERVIEW: Global Economy:

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. Global growth is projected to stay at 3.1 percent in 2024 and rise to 3.2 percent in 2025. Elevated central bank rates to fight inflation and a withdrawal of fiscal support amid high debt weigh on economic activity. Inflation is falling faster than expected in most regions, amid unwinding supply-side issues and restrictive monetary policy. Global headline inflation is expected to fall to 5.8 percent in 2024 and 4.4 percent in 2025, with the 2025 forecast having been revised down. Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy. Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation.

Indian Economy Outlook:

Indias economy has demonstrated remarkable resilience in the face of global headwinds and geopolitical tensions, driven by robust domestic consumption, a resurgence in rural demand, and sustained investment and manufacturing momentum. This broad-based growth across sectors underscores Indias pivotal role in supporting the global economy and highlights its ability to navigate complex macroeconomic challenges. The countrys economic performance is a testament to its strong fundamentals and its emergence as a key driver of global growth. The concerted efforts of the Government and the Reserve Bank of India (RBI) to combat inflation, including the implementation of judicious monetary policy measures, strategic food buffer management, and targeted import easing, have yielded impressive results in inflation management. As a consequence, retail inflation in Financial Year 2023-24 has exhibited a significant downtrend, plummeting to its lowest point since the onset of the Covid-19 pandemic. Moreover, core inflation has decreased to a mere 3.3% in March 2024, indicating a notable achievement in price stability. Looking ahead, forecasts of an above-normal monsoon in 2024 augur well for a bountiful harvest, further alleviating inflation concerns and bolstering economic prospects.

Amidst the prevailing global trade slowdown, India is poised to defy trends, with its trade deficit projected to decline in the forthcoming years. The Production Linked Incentive (PLI) scheme is expected to drive this growth, as it expands its scope and encompasses additional sectors. Fueled by robust exports and steadfast remittances, leading international agencies and the RBI forecast a significant moderation in the Current Account Deficit (CAD) to GDP ratio, dipping below 1% in Financial Year 2023-24. This resilient performance underscores Indias economic strength and its ability to navigate complex global trade dynamics.

India maintains its position as the worlds fastest-growing major economy, with an optimistic growth trajectory forecasted for the current fiscal year. Leading international organizations and the Reserve Bank of India (RBI) have reaffirmed their confidence in Indias economic prospects, issuing favourable growth projections. This consensus endorsement underscores the countrys robust economic fundamentals and its ability to sustain momentum in the face of global uncertainty, solidifying Indias status as a beacon of growth and stability

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The retail and consumer durables sector experienced a subdued growth in the reviewed period, largely attributed to inflationary pressures stemming from elevated commodity prices, logistical challenges, and supply chain disruptions. However, the sector is poised for a resurgence, driven by untapped market potential, burgeoning demand from Tier 3 cities and beyond, shifting consumer behaviors in the post-pandemic era, premiumization trends, pent-up demand, and supportive policy initiatives. The market is projected to reach a staggering $21 billion by 2025. Furthermore, the integration of artificial intelligence in consumer appliances and electronics has unlocked vast opportunities, given the immense scale of the consumer durable market. The home automation products industry is expected to reach $8 billion by 2027, fueled by increasing internet penetration and the rise of connected home appliances, presenting a transformative landscape for the industry.

The Indian market for chimneys and built-in hobs is experiencing significant growth, fueled by the increasing accessibility of these products through diverse distribution channels, both online and offline. The rising demand for modular and advanced appliances is also driving this growth. The unique characteristics of Indian cooking techniques, which involve high-heat frying and saut?ing, necessitate the use of kitchen chimneys to mitigate the impact of moisture, smoke, and grease on kitchen surfaces. By providing effective ventilation and reducing indoor pollution, kitchen chimneys create a safer and healthier cooking environment. Built-in hobs further enhance this experience, offering improved safety, convenience, and cooking efficiency. As a result, these appliances have become a staple in Indian kitchens, with widespread adoption across residential, commercial, and hospitality sectors The Indian kitchen appliances market is experiencing a significant transformation, driven by escalating consumer sophistication and a growing penchant for premium products. Electric kitchen appliances have become an indispensable aspect of modern living, with a diverse range of products catering to the varied needs of consumers across the country. Key market drivers include the increasing number of working women, rapid urbanization, growing household numbers, rise of dual-income nuclear families, improving living standards, and increasing disposable income, all contributing to a higher spend on lifestyle upgrades. The India chimneys and built-in hobs market is poised for robust growth, with a projected CAGR of 13.30% between 2023 and 2028. The kitchen chimney market in India achieved a valuation of USD 1.65 billion in 2022 and is expected to reach USD 3.48 billion by 2028, further fueling market growth. The market is anticipated to grow at a CAGR of 12.7% between 2023 and 2028, driven by these factors. This growth trajectory presents a compelling opportunity for industry stakeholders to capitalize on the evolving consumer preferences and rising demand for premium kitchen appliances in India. The market for kitchen range chimneys is being driven by the growth of modular kitchens and the demand for convenient kitchen appliances among consumers. Indian kitchens have seen changes over the years. These are also known as "ready-to-install" cabinets because they can be customized according to customers preferences. As a result, kitchen chimneys have been accepted and have entered the market more quickly.

SUMMARY OF OUR BUSINESS:

Our Company was incorporated in the year 2017 by conversion of Partnership firm "M/s. Techno Engineering Corpn" into the Company as "Inflame Appliances Limited" under the provision of Companies Act. Inflame is a Public Limited Company engaged in manufacturing of various Kitchen Appliances such as Kitchen Hoods, Gas Hobs & LPG Stoves. The factory at the present location was started in 2018 and the facility to manufacture Kitchen Hoods was installed in 2019. Ever since, we have developed in excess of 20 models for Kitchen Hoods and in terms of production, we are already among 3 top manufacturers in India. The company is providing Kitchen Hoods to Indian marketer companies in their own brands & is in direct competition with Chinese suppliers. The market for Kitchen Hoods is almost 2 million a year and is growing at about 15 % year on year. The present penetration for this product is very less & thus scope for growth is tremendous. With this idea and also to mitigate logistics cost, company has decided to start its second plant at Hyderabad and plan to produce almost 20-25k chimneys per month at both locations. For FY23-24 the company is aiming to produce 240,000 chimneys from Panchkula and 100,000 chimneys from the Hyderabad plant. The company is targeting to achieve 50% CAGR for the next 3-5 years.

The company has 2 facilities – one each at Panchkula, Haryana and Hyderabad, Telangana (currently under setup). Once the Hyderabad facility is fully functional, the company will have combined capacity in India to manufacture 600,000 units of Chimneys, 120,000 units of Hobs and 300,000 units of Gas stoves. This makes Inflame Appliances the largest kitchen appliances manufacturer in India under one roof with the widest product range.

The setting up of our Hyderabad facility gives us a 2-pronged benefit. One, the ability to target Southern markets more efficiently and profitably, and second being the ability to compete with imports (primarily from China) thereby meeting the "Make in India" criteria, making us one of the leading players in the kitchen appliances manufacturing business in India.

The company is also moving towards achieving 100% in-house manufacturing with less than 1% rejection rate. It is also moving towards adoption of 100% environmentally friendly and recycled packaging.

The company is also working towards expanding its product offerings in the kitchen appliances space with new products like dish washers, ovens and built in ovens, which will be developed over the next 18–24 months. All these steps coupled with the combined experience of the promoters and management forms the key strengths of the Company thus laying a strong foundation for sustained growth into the future. The management team comprises promoters with ‘hands on experience for four decades and senior professionals who possess vast experience in the kitchen appliances industry. They have witnessed multiple business cycles and have ably steered the Company through challenging market trends. A mix of promoter family and professionals in the leadership team provides the best of both worlds. Family representation offers a strong sense of dedication and direction for ensuring continued success while professionals offer functional expertise and ensure adoption of best business practices in corporate governance. Your company is so far serving its customers Sunflame Appliances & Hindware for supply of chimney under their brand name. Further, your company has widened its customer base and has added various prestigious Companies like Flipkart, PKL Limited (Brand Clix), Green Line Appliances, Kaff Appliances, Wonderchef, Tuareg Marketing Private Limited, Stove Kraft Limited etc. as its Customers. Your Company is continuously focusing on growing and expanding its business. Further Our Company also adding new product like Oven Toaster Grills, Gas stoves, Hobs at our new Production Plant at Maheshwaram, Hyderabad.

SALIENT FEATURES OF OUR PRODUCTS:

The process of manufacturing involves majorly processes which are in house manufactured and procurement of components from outside vendors.

Some processes done in house are:

1) Processing of sheet metal components

2) Processing glass components

3) Powder coating of sheet metal parts

4) Assembly of Products

There are some "Bought out Parts" BOP components. These components are majorly sourced from our dedicated vendors in India & China. The Incoming Quality checking (IQC) is very important for both BOP parts and in house produced components. Once material is received in store, IQC is done, upon clearance from IQC, the material is processed/used for various production activities. On-line inspection & Pre-Dispatch Inspection are conducted as per Quality parameters/policy. Once product is ready, we pack them in boxes as per packing standards.

We place significant emphasis on providing quality products. To this end, we strive to maintain quality standards at all our manufacturing products. Quality management plays an essential role in determining and meeting customer requirements, preventing defects and improving our products. We have a network of quality systems throughout our business which relate to the design, development, manufacturing, packaging and distribution of our products.

OUR COMPETITIVE STRENGTHS

We believe that the following are our primary competitive strength:

Quality of our Products

Our strength lies in understanding the requirement of the customer and our execution capabilities. This has enabled us to get repeat orders from our existing customers and attract new customers, we believe that the intricacies of our designs and quality of our products finish enables us to get better margins on the products manufactured by us.

Cost efficient sourcing and location advantage

We believe that our cost-efficient manufacturing and supply chain management results in a significant reduction in our operational costs. With our experience, we are able to timely procurement of raw materials and we are also able to source these materials at a competitive price. The location of our current manufacturing facilities gives us a significant competitive cost advantage in terms of raw material sourcing, manufacturing and labour costs. The key raw materials for the manufacture of our products are various types of Stainless steel, GPSP steel, electrical cables, LED Lights, PCB and Switches, Clear glass packaging which are available in neighbouring states which results in lower logistic costs. Our manufacturing units are located in states we believe offers potential market for our products thus reducing the logistical costs associated with delivery. The strategic location helps to market the product in the neighbouring States and also exports to foreign countries.

Proven and experienced management team

Our Promoter has around vast experience in the industry. We believe that our senior management team has extensive experience in the commissioning of and operating manufacturing capacities, finance, sales, business development and strategic planning in the industry. The vision and foresight of our management enables us to explore and seize new opportunities and accordingly position ourselves to introduce new products to capitalize on the growth opportunities in the Kitchen Appliances Industry. We believe that the demonstrated ability and expertise of our management team for committed asset investment and use of cutting-edge technology results in growing capacities and rising production levels with better cost management and enhanced process efficiency has translated into our quality product, increasing profitability and improved margins which gives us a competitive edge.

Research and Development

Right from the beginning our Company has believed in research and development which has benefited our company to lay a technical foundation and the capability that allows the Company to offer customized solutions to the customers. A facilitated design and research and development department enables a continuous study of the customer feedback and related technology to make the necessary upgradation. In house facilities for designing and delivering world class products along with infrastructure to manufacture most of Chimney and sheet metal components make us the most desirable manufacturer in the country.

Extensive Distribution Network

Inflame envisage to capture 40% market share in the next 5 years by expanding its manufacturing facilities to multiple strategic locations covering major regions of India. The State government of Telangana decided to provide support to start-ups in the form of grants for their innovative solutions that have the potential to address the local and social issues in rural areas. In this regard, Company is Set-up a new manufacturing plant in Hyderabad, Telangana and commercial production has been already started in June 2023 & a proposed new centralized R&D lab in Panchkula, Haryana. Recently, Distributors Network has been set up in the States of Maharashtra, Gujarat, West Bengal, Uttar Pradesh, Punjab, Haryana, Jammu & Kashmir and Himachal Pradesh. In time to come, this distribution network would be spread across Pan-India and complete product range would be offered to consumers through this distribution network.

OUR BUSINESS STRATEGY:

Quality Assurance

Inflame is a prominent manufacturer of modern kitchen appliances in India. The management hold a vast experience in the domain Backed by the cutting-edge production technology& High-end German technology CNC machines imported from Trumf (Germany). Inflame offers exceptional value in its futuristic products. A dedicated Design and R&D lab to produce innovative, energy-efficient products managed by a team of industry professionals. We endeavour to maintain the quality of our products, and follow strict procedures to ensure quality control, timely delivery and competitive prices. The company intends to strengthen its product development effort by leveraging skills of its employees which will help to increase the sales of the Company and retain customers.

To build-up a professional Organization

We believe in transparency, commitment and coordination in our work, with our suppliers, customers, government authorities, banks, financial institutions etc. We have a blend of experienced and sufficient staff for taking care of our day-to-day operations. We also consult with external agencies on a case-to-case basis on technical and financial aspects of our business. We wish to make it sounder and stronger in times to come.

Development of new product for both domestic and overseas markets

Our Company is continuously looking out for improvements in our regular products and developing new products for the domestic and overseas markets. We have introduced various new products in the current year like Electrical Chimney, Glass Hobs, Oven Toaster Grill and other Cooking Ranges and we are now in the process of introducing newer in coming years. These products will further enhance our Companys product portfolio to be offered to our customers. We would be creating a separate division to create an overseas market for its products.

Optimal Utilization of Resouces

Our Company constantly endeavours to improve our manufacturing process to optimize the utilization of resources. We have invested significant resources, and intend to further invest in our activities to develop customized systems and processes to ensure effective management control. We regularly analyse our existing policies to be carried out for operations of our Company which enable us to identify the areas of bottlenecks and correct the same. This helps us in improving efficiency and putting resources to optimal use.

OPPORTUNITIES:

The growing popularity of premium kitchen appliances on account of rising consumer awareness about high quality and durability represents one of the key factors positively influencing the market in India. Inflame took it as an opportunity by developing all components in India and preparing for the worst circumstances by eliminating dependence on China completely. Today, when businesses are hugely affected due to high logistics cost, badly delayed shipments &commodity price hikes, manufacturing in India is way viable than imports. During the last two years, Inflame has successfully Indianized over 30 chimney models and replaced Chinese manufacturers by supplying made in India products to top Indian appliances brands in substantial quantities.

High Demand for Quality Makes easier to replace Chinese products with better quality "Made in India" products with low freight and inventory-carrying cost. Inflame is a Public Limited Company engaged in manufacturing of various Kitchen Appliances such as Kitchen Hoods, Gas Hobs & LPG Stoves. The factory at the present location was started in 2018 and the facility to manufacture Kitchen Hoods was installed in 2019. Ever since, we have developed in excess of 20 models for Kitchen Hoods and in terms of production, we are already among 3 top manufacturers in India. The company is providing Kitchen Hoods to Indian marketer companies in their own brands & is in direct competition with Chinese suppliers.

Urban customers are now considering appliances as lifestyle products and are open to pay increased prices for products that are ergonomically designed and offer multiple features. Positive trends in demographics have further helped to enhance growth. Factors such as the increasing number of nuclear families have led to a rise in the volumes of appliances sold.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Our Company has carved a niche for itself in the kitchen appliance market, specializing in the production of Kitchen Hoods, Gas Hobs & LPG Stoves. Our companys total sale increased by 19.50% to Rs. 924,369.22 against Rs. 773,595.54 in previous financial year 2022-23. Our Company prioritizes quality and efficient manufacturing processes. Our commitment is evident in our investment in cutting-edge machinery, a skilled workforce, and a variety of in-house capabilities that ensure smooth operations. Furthermore, our company boasts a well-developed infrastructure that receives regular upgrades. This dedication to incorporating the latest advancements in technology and best practices positions our company for continued growth and success in the kitchen appliance industry.

OUTLOOK

Our Company stands out as a leader in innovation, boasting Indias 1st integrated facility to produce variety of appliances like Chimneys, Hobs and Gas stoves. Our robust infrastructure is continuously upgraded with cutting-edge technologies, to achieve efficient backward integration and introduce a steady stream of innovative new models. This positions our Company perfectly for expanding our domestic and global markets very soon.

Were at the forefront of the smart kitchen revolution, utilizing AI and IOT to create appliances that transform your culinary experience. Imagine voice-controlled cooking and chimneys with LED displays offering recipe suggestions – that future is closer than ever with Inflame. Our long-term vision is to become a global leader in high-quality appliances, exceeding customer expectations. A strategic facility in western India will further fuel our export ambitions, particularly in Africa and other emerging markets.

THREATS, RISK AND CONCERNS

Despite our growth, we recognize the complexities of the Indian kitchen appliance industry, The market is fragmented and fiercely competitive, with both established players and newcomers vying for a slice of the pie. International companies are aggressively entering the scene through mergers and acquisitions, further intensifying the competition. While this growth is positive for the industry as a whole, some new entrants prioritize short-term gains over quality. They source low-grade products from China and engage in unsustainable practices, potentially disrupting market stability and impacting consumer demand.

Our company acknowledges the challenges it faces in this dynamic marketplace. Our company is constantly strategizing to counter intense competition from both domestic and international players. An unpredictable business environment with fluctuating policies and volatile foreign exchange rates necessitates a nimble and adaptable approach. Our company further recognizes the risks posed by rising costs of capital, which can hinder investments in essential upgrades and new product development. Finally, uncertainty surrounding the availability and cost of raw materials threatens to disrupt production capacity and output. Our company has proactive approach to managing these challenges which is a testament to its commitment to long-term success.

Undeterred by the ever-present competition, our company charts a course for long term success. Our company prioritizes long-term sustainability, unwavering quality, and strategic decision-making as its guiding principles. This commitment ensures us to stay ahead of the at the forefront of innovation and industry trends and maintains our competitive edge.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Our Company maintains an adequate system of Internal Controls including suitable monitoring procedures to ensure accurate and timely financial reporting of various transactions, efficiency of operations and compliance with statutory laws, regulations and Company policies. Suitable delegation of powers and guidelines for accounting has been issued for uniform compliance. In order to ensure that adequate checks and balances are in place and internal control systems are in order, regular and exhaustive Internal Audit of Office/plant are conducted by the in-house Internal Audit Division and external professional audit firm. The Internal Audit covers all major areas of operations, including identified critical/risk areas, as per the Annual Internal Audit Programme.

The Audit Committee of Directors periodically reviews the significant findings of different Audits, as prescribed in the Companies Act, 2013 and in the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: AMOUNT

(RS. IN LAKHS)

PARTICULARS	YEAR ENDED 31.03.2024	YEAR ENDED 31.03.2023
Revenue From Operations	9243.69	7735.96
Other Income	130.08	64.38
Total Revenue (I+II)	9373.77	7800.34
Earnings Before Interest, Taxes, Depreciation and Amortization Expense	917.77	1063.12
Finance Cost	321.65	209.68
Depreciation and Amortization Expense	443.02	223.94
Profit Before Tax (IV-V-VI)	153.11	629.50
Extraordinary items	-	189.04
Tax Expense:
i. Current Tax Expense	25.56	6.16
ii. Deferred Tax Expenses	53.25	(110.50)
iii. MAT (25.56)	-
iv. Short and excess provision of tax relating to earlier year	5.02	-
Profit After Tax (VII-VIII)	104.88	323.80

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Companys relations with the employees continued to be cordial and harmonious with its employees. It considers manpower as its assets and that people had been driving force for growth and expansion of the Company. The Company acknowledge that its principal assets is it employees. The Company has continued its efforts in building a diverse and inclusive workforce.

The total number of employees on roll in the Company as on 31st March, 2024, including factory workmen, was 197. The Company will continue to create opportunity and ensure recruitment of diverse candidates without compromising on meritocracy.

KEY FINANCIAL RATIOS:

RATIO	FIGURES AS AT 31.03.2024	FIGURES AS AT 31.03.2023	% CHANGE FROM LAST YEAR	Explanation for Change in Ratio (for more than 25% in comparison with last year)
Current Ratio	1.61	1.67	-4%	NA
Debt-Equity Ratio	0.40	0.26	52%	Regarding Debt-Equity Ratio, during Current Financial Year both secured and unsecured loans has increased resulting in increase in debt equity ratio
Debt Service Coverage Ratio	1.44	1.85	-22%	NA
Return on Equity Ratio	0.02	0.12	-80%	Regarding Return on Equity Ratio, during Current Financial Year Companys PAT has been decreased as comparing last Financial Year resulting in decrease in above said ratio.
Inventory turnover ratio	3.43	5.37	-36%	Regarding Inventory Turnover Ratio, due to increase in closing inventory, inventory turnover ratio decrease.
Trade Receivables turnover ratio	4.03	4.45	-9%	NA
Trade payables turnover ratio	6.53	7.07	-8%	NA
Net capital turnover ratio	3.64	3.53	3%	NA
Net profit ratio	0.01	0.04	-73%	Regarding Net profit ratio, during Current Financial Year Companys PAT has been decreased as comparing last Financial Year resulting in decrease in above said ratio.
Return on Capital employed	0.07	0.12	-42%	Regarding Return on Capital employed ratio, during Current Financial Year Companys PAT has been decreased as comparing last Financial Year resulting in decrease in above said ratio.
Return on investment	NA	NA	NA	NA

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with Accounting Standard ("AS") notified under the Companies (Accounting Standards) Rules, 2021 read with section 133 of the Companies Act, 2013.

CAUTIONARY STATEMENT

Statement in this report describing the Companys objectives projections estimates and expectation may constitute "forward looking statement" within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumption and expectations of future events. These Statements are subject to certain risk and uncertainties. The Company cannot guarantee that these assumption and expectations are accurate or will be realized. The actual results may different from those expressed or implied since the Companys operations are affected by many external and internal factors which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments information or events.

Registered office:	For and on behalf of Board of Directors
Khewat Khatoni No. 45/45, Khasra No. 942/855/1 Village Kalyanpur Tehsil-Baddi, Baddi Solan-173205, Himachal Pradesh.	For, Inflame Appliances Limited
Corporate Office:	CIN: L74999HP2017PLC006778
Village Bagwali, Khasra No. 40/14-15-16-17/1, Block - Raipur Rani, Nh-73, Panchkula-134202.	Aditya Kaushik
Date : August 05, 2024	Chairman and Managing Director
Place : Panchkula	DIN 06790052