This discussion covers the financial results and other developments for
the year ended March 31, 2023. Statements in this 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. Although the expectations are based on reasonable assumptions, the actual
results might differ on account of various factors such as changes in Government
regulations, tax regimes, economic development, exchange rate and interest rate movements,
competitive environment, product demand and supply.
Management Discussion & Analysis is structured to comprise:
Economic Review Segment Wise Report Outlook Internal Control System and Adequacy Strengths
Risk and Concern Threats Opportunities Human Resource
ECONOMIC REVIEW:
Your Company is strongly focussed in the FMCG, cosmetics and pharma
products resulting in the sales turnover of Rs. 43200.65/- Lakhs. We are deeply
committed to advancing technology that can address changing consumer needs. On an ongoing
basis, management focuses on a variety of key indicators to monitor business health and
performance. These indicators include market share, net sales, gross profit margin,
operating profit, net income and earnings per share. The monitoring of these indicators
and the Companys Code of Conduct and Corporate Governance practices help to maintain
business health and strong internal controls. The financial highlights of the Company are
mentioned under the Directors Report which forms an integral part of this Annual Report.
The operating environment this year continued to remain volatile and
challenging. Your Company believes that the Companys business will continue to grow
strongly in the next several years with a strong management team, wide distribution
network, innovation and technology capabilities, cost efficiency programs, your Company is
well placed to sustain growth and is confident of addressing the evolving situation. There
is a significant shift in consumer preferences and behaviours, growth of online business
channels and higher demand for FMCG and value products are some of the changes brought
about by the pandemic. These trends are likely to strengthen and present new opportunities
for FMCG business in near future.
Fast Moving Consumer Goods (FMCG):
The FMCG industry is optimistic about at least 20 per cent growth in
2023 after an ‘exponential growth in 2022. FMCG industry grew by 7-8 per cent
in 2022 in terms of sales and is likely to grow at the same pace in 2023 if the growth
trajectory remains the same. Further, the FMCG companies reiterated that there had been a
transition from unorganised to organised segment in 2022 which will continue in 2023 and
the FMCG sector is poised to outgrow traditional growth rates. Additionally,
digitalization is likely to be a significant driving force in the growth and development
of the FMCG sector in 2023. Around 80 per cent of consumers will see the world as all
digital in the years to come, with no divide. Increasing smartphone and internet
penetration will further help people in rural areas easily access online shopping on
various e-commerce websites.
Changing Dynamics of the FMCG Sector:
The FMCG landscape is undergoing a drastic change, which is impacting
consumer behaviour across the global markets. It is expected that following consumer trend
to pick up globally: a. Boost consumer focus particularly on preventive healthcare
products, with a preference for Ayurveda based solutions that increase immunity power of
human body. b. Importance to Personal Hygiene with increase in demand for personal
cleanliness products such as hand and home sanitizers, soaps etc. expected to grow
exponentially. c. Spending on luxurious things would be curtailed due to change in
priorities from discretionary towards essentials and movement towards financial security.
d. Advancement of technology would act as a catalyst for convenient, safe and enhanced
consumer experiences.
SEGMENT WISE REPORT
During the year ended 31st March 2023, Operational Revenue including
other income on Standalone basis was Rs 43492.51 Lakhs and Profit / (Loss) Before Tax was
Rs 1366.99 Lakhs v/s Rs. (90.33) Lakhs in previous year while Net Profit / (Loss) for the
financial year ended March 31, 2023 was Rs. 987.09 Lakhs v/s Rs. (73.81) Lakhs in previous
year.
On a consolidated basis the operational revenue including other income
was Rs. 45661.85 Lakhs and Profit/ (Loss) Before Tax was Rs. 1953.43 Lakhs v/s Rs. 225.30
Lakhs last year. The Net Profit / (Loss) for the financial year ended March 31, 2023 was
Rs. 1573.28 Lakhs v/s Rs. 241.66 Lakhs in previous year.
Internationally, we have exported our products in more than 40
countries as on date. The Company is striving hard to expand its geographical base by
exporting too many more countries in future.
OUTLOOK
There are some trends which are emerging in the markets. Especially in
the developed markets, due to the continuing recessionary trends, the consumer spending is
cautious with higher value demands which are giving rise to high competitive intensity in
those markets. There is also a continual shift of consumers towards health, wellness and
convenience segments. There is also a growing trend for more premium products in some
markets. We expect these challenges and trends to remain for some time to come also. We
expect the retail environment to be very competitive with aggressive promotions to sustain
growth. We also expect the significance of modern trade to increase over traditional trade
in the developing markets exacerbating the competitive environment. The Company continues
to constantly strive to meet these challenges with a continuous support to brands,
category expansion, innovation and cost rationalization.
INTERNAL CONTROL SYSTEM AND ADEQUACY
The Companys internal control systems are commensurate with the
nature of its business and the size and complexity of its operations. These are routinely
tested and certified by Internal Auditors and cover all offices, factories and key
business areas. Significant audit observations and follow up actions thereon are reported
to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the
Companys internal controls environment and monitors the implementation of audit
recommendations, including those relating to strengthening of the Companys risk
management policies and systems.
STRENGTHS
Lykis is an existing brand, experienced in operations and management of
FMCG products. Operations are handled by a strong experienced management and professional
team and also there is a strong technical and development team for support.
RISK AND CONCERN
Risk management is an integral to your Companys strategy and to
the achievement of Lykiss long-term goals. Our success as an organisation depends on
our ability to identify and leverage the opportunities generated by our business and the
markets we operate in. In doing this we take an embedded approach to risk management which
puts risk assessment at the core of the Boards agenda, which is where we believe it
should be.
These risks can be broadly classified into following categories:
Strategic Risk Compliance and Governance Risk
Financial Risk Operational Risk
For each of our principal risks we have a risk management framework
detailing the internal controls we have in place and who is responsible for managing both
the overall risk and the individual controls mitigating that risk. Our assessment of risk
considers short and long term as well as internal and external risks including financial,
operational, sectoral, sustainability (particularly Environment, Social and Governance
related risks), information, cyber security, legal & compliance and any other risks as
may be determined by the Company Leadership teams. How the identified risks are changing
as well as emerging risk areas are reviewed on an ongoing basis, and formally by the
Board. We integrate risk management with strategy formulation and business planning
processes.
THREATS
Since it is a growing industry, there is a threat of competition from
the other players who might try to create an unhealthy practice of competition by
compromising on the quality and pricing. We have an established team of professionals to
handle the operations and are in the process of hiring more such kinds of professionals.
OPPORTUNITIES
Growing awareness, easier access, and changing lifestyles are the key
growth drivers for the consumer market. The focus on agriculture, MSME, education,
healthcare, infrastructure and employment under the Union Budget is expected to directly
impact the FMCG sector. These initiatives are expected to increase the disposable income
in the hands of the common people, which will be beneficial for the sector.
| KEY FINANCIAL RATIOS |
|
|
| Ratios |
Consolidated |
Standalone |
|
FY 2022-23 |
FY 2021-22 |
FY 2022-23 |
FY 2021-22 |
| Interest Coverage Ratio |
4.35 |
2.25 |
3.53 |
1.05 |
| Current Ratio |
1.17 |
1.06 |
1.2 |
1.13 |
| Debt Equity Ratio |
6.95 |
10.46 |
6.27 |
5.82 |
| Operating Profit Margin |
5.71 |
0.14 |
4.57 |
0.14 |
| Net Profit Margin |
3.53 |
0.0067 |
2.33 |
-0.0028 |
| Debtors Turnover Ratio |
4.62 |
5.47 |
4.52 |
4.83 |
MATERIAL DEVELOPMENT IN HUMAN RESOURCE
Employees are the valuable assets and the strength of an organisation
in its growth, prosperity and development. Your Company has a team of qualified and
dedicated personnel who have contributed to the growth and progress of the Company.
Necessary training is being imparted to the employees and various seminars and workshops
are being conducted to continuously hone their skills.
|
For and on behalf of the Board
of Directors |
|
Nadir Dhrolia |
Shafeen Charania |
|
Managing Director |
Non-Executive Director |
| Date: May 18, 2023 |
03303675 |
07283015 |
+91-9892691696
