Magson Retail and Distribution Ltd Management Discussions

ANNEXURE - III

COMPANY OVER VIEW

Our company was incorporated as Magson Retail & Distribution Private Limited on December 10, 2018under Companies Act, 2013. Further the name of the company was subsequently changed to "Magson Retail & Distribution Limited" pursuant to a special resolution passed by the shareholders of the company at the Annual General Meeting held on 30th September, 2022. A fresh certificate of incorporation consequent upon change of name was issued on 20th December 2022 by the Registrar of Companies, Ahmedabad, Gujarat.

OUR BUSINESS OVER VIEW

Our company is a prominent player in the retail and distribution sector, specializing in gourmet, frozen, and imported food products. With a strong presence in the market, we operate 30 retail stores spread across various cities, providing a diverse range of high-quality food products to our discerning customers. Our commitment to excellence, customer satisfaction, and innovation has positioned us as a preferred destination for gourmet food enthusiasts.

Currently company operates 30 retail stores/outlets of which 30 are operated by the company and4 areoperated by franchise owners, MRDL operates all itsstores under the registered brand name "MagSon". The said stores/outlets are located across WesternIndia with 30 outlets in prominent cities which includes one each in Thane-Maharashtra, Udaipur-Rajasthan, Ahmedabad, Surat, Vadodara Gandhinagar, Anand, Rajkot, Jamnagar, Gandhidham- Gujarat and Indore- Madhya Pradesh. (including one chocolate store in Ahmedabad).

INDUSTRY OVERVIEW

The retail and distribution industry, particularly in the gourmet and imported food segment, has seen significant growth over the past few years. Increasing consumer interest in diverse and high-quality food products, coupled with rising disposable incomes, has driven demand. The industry is characterized by rapid changes in consumer preferences, a focus on health and wellness, and the advent of new distribution channels, including e-commerce.

Retailers play a very important part in the distribution of products in the market as they serve as a link between manufacturers of goods/products and their consumers. Retail industry of India contributes over 10% of the GDP and is projected to grow at 9% p.a. up to the year 2030. With the diversified use of internet in the business field and the Indian e-retail industry having the third highest number of retailers, the industry is expected to grow at 25-30% p.a.

OPPORTUNITIES:

I) Market Expansion:

• Growing Demand for Gourmet and Imported Foods: With increasing globalization and exposure to international cuisines, there is a rising demand for gourmet and imported food products. This presents a significant opportunity for our company to expand our product offerings and attract a broader customer base.

• Urbanization and Changing Lifestyles: Rapid urbanization and evolving consumer lifestyles are driving the demand for convenient and high-quality food options. Our wide range of gourmet and frozen food products caters to this growing need.

II) E-commerce Growth:

• Online Shopping Trends: The shift towards online shopping offers a lucrative opportunity to enhance our e-commerce platform. By providing a seamless online shopping experience, we can reach a larger audience and increase sales.

• Omni-channel Integration: Integrating our online and offline channels will allow us to offer a cohesive shopping experience, enabling customers to enjoy the convenience of online ordering with the reliability of in-store pickups and deliveries.

III) Product Innovation:

• Health and Wellness Trends: Consumers are increasingly seeking healthier food options. By expanding our range of organic, gluten-free, and other health-focused products, we can tap into this growing market segment.

• Exclusive Product Lines: Developing exclusive product lines and collaborations with renowned gourmet brands can set us apart from competitors and attract loyal customers.

IV) Geographic Expansion:

• New Store Openings: Identifying and entering new geographic markets with high growth potential will enable us to expand our retail footprint and increase market share.

• Franchising Opportunities: Exploring franchising opportunities can accelerate our expansion plans while leveraging local expertise and investments.

V) Customer Engagement:

• Loyalty Programs: Implementing robust loyalty programs can enhance customer retention and drive repeat purchases. Personalized marketing strategies, based on customer data and preferences, can further strengthen customer relationships.

• Community Engagement: Building strong ties with local communities through events, sponsorships, and partnerships can enhance our brand reputation and foster customer loyalty.

STRENGTHS:

I) Diverse Product Portfolio:

• Wide Range of Offerings: Our extensive selection of gourmet, frozen, and imported food products caters to various customer preferences and dietary needs, providing a competitive edge in the market.

• Quality and Exclusivity: We are committed to offering high-quality products, many of which are exclusive to our stores, ensuring a unique shopping experience for our customers.

II) Established Brand Reputation:

• Trusted Brand: Over the years, we have built a strong and trusted brand reputation, known for our quality products and excellent customer service.

• Customer Loyalty: Our focus on customer satisfaction has fostered a loyal customer base, driving repeat business and positive word-of-mouth.

III) Strategic Store Locations:

• Prime Locations: Our stores are strategically located in high-traffic urban areas, ensuring easy accessibility and convenience for our customers.

• Market Penetration: With 30 stores in different cities, we have a significant presence and market penetration, allowing us to effectively serve a wide customer base.

IV) Strong Supplier Relationships:

• Reliable Supply Chain: We have established strong relationships with reputable suppliers, ensuring a consistent supply of high-quality products.

• Sustainable Sourcing: Our commitment to ethical and sustainable sourcing practices enhances our brand image and appeals to environmentally conscious consumers.

V) Experienced Management Team:

• Industry Expertise: Our management team comprises experienced professionals with extensive knowledge of the retail and distribution industry.

• Strategic Vision: The teams strategic vision and leadership have been instrumental in driving the companys growth and success.

VI) Operational Efficiency:

• Efficient Operations: Our streamlined operations, effective inventory management, and cost- control measures contribute to our profitability and overall business performance.

• Technological Integration: Leveraging advanced technologies in our operations enhances efficiency and provides valuable insights for decision-making.

PRODUCTSEGMENTS IN FOOD AND GOURMET INDUSTRY

The Company has dealing is single segment i.e. the Company is engaged in the business of retail trade through a chain of stores. The market is highly competitive. But our company has always put great emphasis to sustainsatisfactory performance by focusing on quality product to its customers.

The Food market includes all kinds of fresh and processed foods. The market is divided into followingsegments: Dairy Products & Eggs, Meat, Fish & Seafood, Vegetables, Fruits, Bread & Cereal Products, Oils &Fats, Spreads & Sweeteners, Sauces & Condiments, Convenience Food, Confectionery & Snacks, Baby Foodand Pet Food. Food represents a significant part of household expenditure, but its relative importance compared to other products decreases with increasing income.

BUSINESS STRATEGY

1) Expansion of Retail Network: We plan to expand our retail footprint by opening an additional 10

stores in key strategic locations over the next two years. This expansion aims to increase our market penetration and brand visibility.

2) Product Diversification: Continuously enriching our product portfolio with new and exclusive gourmet and imported food items to cater to evolving consumer tastes and preferences.

3) Digital Transformation: Investing in e-commerce capabilities to complement our physical stores, providing a seamless omnichannel experience to our customers. Enhancements to our website and mobile app will facilitate online ordering, home delivery, and in-store pickup services.

4) Supply Chain Optimization: Strengthening our supply chain to ensure the freshness and quality of our products, while also reducing costs and improving delivery times. Partnerships with local and international suppliers will be further developed to ensure a steady supply of high-demand products.

5) Customer Engagement: Leveraging data analytics to gain insights into customer preferences and tailor our offerings accordingly. Implementing loyalty programs and personalized marketing campaigns to enhance customer retention and satisfaction.

RISKS AND CONCERNS:

The Company recognizes that risk is an integral and unavoidable component of business andis committed to managing the risk in a proactive and effective manner. In todays challengingand competitive environment, strategies for mitigating inherent risks in accomplishing thegrowth plans of the Company are imperative The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Key business risks and mitigation strategy are highlighted below:

1) Business Risk: To mitigate the risk of high dependence on any one business for revenues, the

Company has adopted a strategy of launching new products / services.

2) Legal & Statutory Risk: The Company Secretary, Compliance and Legal Functions advices the

Company on issues relating to compliance with law and to pre-empts violations of the same. The Company Secretary submits a quarterly report to the Board on the Companys initiatives to comply with the laws of various jurisdictions. The Company also seeks independent legal advice wherever necessary.

3) Human Resource Attrition Risk: The Companys key assets are its employees and in a highly

competitive market, it is a challenge to address attrition. The Company continues to accord top priority to manage employee attrition by talent retention efforts and offering a competitive salary and growth path for talented individuals.

4) Others: The common risks for the Company are financial risks. credit risk, liquidity risk, market risk etc. The Company adopts a systematic approach to mitigate risks associated with accomplishment of objectives, operations, revenues and regulations. The Company believes that this would ensure mitigating risks pro actively and help to achieve stated objectives.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company implemented suitable controls to ensure its operational, compliance and reporting objectives. The Company has adequate policies and procedures in place for its current size as well as the future growing needs. These policies and procedures play a pivotal role in the deployment of the internal controls. They are regularly reviewed to ensure both relevance and comprehensiveness and compliance is ingrained into the management review process.

Adequacy of controls of the key processes is also being reviewed by the Internal Audit team.Suggestions to further strengthen the process are shared with the process owners and changes are suitably made. Significant findings, along with management response and status of action plans are also periodically shared with and reviewed by the Audit Committee. It ensures adequate internal financial control exists in design and operation.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The revenue from operations for FY 2023-24 is Rs. 6591.35 Lakhs over the previous years revenue fromoperations of Rs. 6225.77 Lakhs which is 5.87% more than previous years revenue from operations.

Net Profit after tax for FY 2023-24 is Rs. 280.91 Lakhs against the previous years Net profit after tax of Rs.251.88 Lakhs.Earnings per Share for FY 2023-24 was Rs. 3.85 against the previous years Earnings per Share of Rs. 8.74.

The company will provide better results to the shareholders in upcoming years via better performance.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Human Resources play a critical role in driving the Companys strategies and growth. The Company endeavours to become the best place to work for its employees and to provide them with a nurturing environment that is essential for their growth. The Company has implemented comprehensive and well-structured HR Policies to ensure employee growth both at personal and professional levels. The Companys talent pool comprises a diverse set of experienced and skilled people who play key roles in enhancing business efficiency, devising strategies, setting up systems and evolving business as per industry requirements. The Company provides a safe, conducive and productive work environment to its people. Overall, the Company provides a nurturing work environment to a diverse set of workforce. The number employees on pay roles of the Company as on 31st March 2024 is 157employees.

FUTURE OUTLOOK

Looking ahead, we are optimistic about the growth prospects in the retail and distribution sector of gourmet and imported food products. Our strategic initiatives, combined with a strong operational framework, position us well to capitalize on market opportunities and deliver sustained value to our stakeholders. We remain dedicated to our mission of providing exceptional food experiences to our customers and maintaining our leadership position in the industry.

We extend our gratitude to our shareholders, customers, employees, and partners for their continued support and trust in our company. We are confident in our ability to navigate the dynamic market environment and achieve our long-term growth objectives.

CAUTIONARY STATEMENT

Certain statements in the reports of the Board of Directors and Managements discussionsand analysis may be forward looking statements within the meaning of applicablesecurities laws and regulations. Actual results could differ materially from those expressedor implied since Companys operations are influence by many external and internal factorsbeyond the control of the Company. The Company assumes no responsibility to publiclyamend, modify or revise any of these statements on the basis of any subsequent developments, information or events.