Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2022.
GLOBAL ECONOMIC OVERVIEW
Global growth is expected to slump from 5.7 percent in 2021 to 2.9 percent in 2022— significantly lower than 4.1 percent that was anticipated in January. It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent- up demand fades, and fiscal and monetary policy accommodation is withdrawn. As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend.
The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid, said World Bank President David Malpass. Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality.
The June Global Economic Prospects report offers the first systematic assessment of how current global economic conditions compare with the stagflation of the 1970s — with a particular emphasis on how stagflation could affect emerging market and developing economies. Developing economies will have to balance the need to ensure fiscal sustainability with the need to mitigate the effects of todays overlapping crises on their poorest citizens, said Ayhan Kose, Director of the World Banks Prospects Group.
Global inflation is expected to moderate next year but it will likely remain above inflation targets in many economies. The report also offers fresh insights on how the wars effects on energy markets are clouding the global growth outlook. The war in Ukraine has led to a surge in prices across a wide range of energy-related commodities. Higher energy prices will lower real incomes, raise production costs, tighten financial conditions, and constrain macroeconomic policy especially in energy-importing countries.
The last two years have been difficult for the world economy on account of the COVID-19 pandemic. Repeated waves of infection, supply-chain disruptions and, more recently, inflation have created particularly challenging times for policy-making. Faced with these challenges, the Government of Indias immediate response was a bouquet of safety-nets to cushion the impact on vulnerable sections of society and the business sector. It next pushed through a significant increase in capital expenditure on infrastructure to build back medium-term demand as well as aggressively implemented supply-side measures to prepare the economy for a sustained longterm expansion.
The Indian economy grew 8.7 per cent in 2021-22, with the gross domestic product (GDP) expanding 4.1 per cent in the March quarter from a year ago. The GDP growth for 2021-22 takes the economy above its pre-pandemic level and is an improvement after contracting 6.6 per cent in 2020-21. The GDP for 2021-22 though is lesser than the 8.9 per cent growth estimated by the Ministry of Statistics and Programme Implementation (MoSPI), which releases the GDP data.
Headwinds to growth are faced by all countries mainly because of global situation (the Ukraine war, supply chain disruptions and consequently rising commodity prices), there are multiple challenges. One is the tightening that is happening in the central banks in the developed world and other is the possibility of commodity prices going up.
The Indian Kitchen Hoods Market value in the year 2021, was USD193.75 million, which is anticipated to grow with a CAGR of 10.57% during the forecast period, 2023-2027, to achieve a market value of USD347.98 million by 2027F. The market growth can be attributed to growing construction and remodeling demand by the consumers toward modular kitchens. Growing demands for chimneys and clear environment in the kitchen further drive the growth of the Indian Kitchen Hoods Market in the upcoming five years.
Modular Kitchen Market Projected 6% CAGR Growth till 2025
Estimated Value over USD 160 Billion by 2025
Growing Indian Market
In next 5 years India is expected to be one of the high growth market for Modular Kitchen
Rising demand from Middle class, Decreasing Household size, customer preference for modern living space
OPPORTUNITIES & THREATS
We believe that our growth in other states in the country can fetch us new business expansion and opportunities. Presently, our presence is in the states of India except Orissa, Chhattisgarh, Bihar, Jharkhand and J&K. Going forward we intend to establish our presence in more locations in the country. Our emphasis is on scaling up of our operations in other markets which will provide us with attractive opportunities to grow our client base and revenue.
• Rise in cost of material and cost of transportation may affect the margin
• Changes in Government Policies
• Intense competition may reduce profitability
• Act of God
• Client Dissatisfaction
• Customers inability to pay
The Companys main business activity is manufacturing of Modular Kitchen & Wardrobe Storage Accessories.
The Company continues to explore the possibilities of expansion and will make the necessary investments when attractive opportunities arise.
RISK & CONCERNS
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.
To mitigate the risk of high dependence on any one business for revenues, the Company has adopted a strategy of launching new products/services, globalising its operations and diversifying into different business segments. The strategy has yielded good results and the Company therefore has a diversified stream of revenues. To address the risk of dependence on a few large clients, the Company has also actively sought to diversify its client base.
Legal & Statutory Risk
The Company has no material litigation in relation to contractual obligations pending against it in any court in India or abroad. The Company Secretary, compliance and legal functions advise the Company on issues relating to compliance with law and to pre-empt 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.
Human Resource Attrition Risk
Maruti Interior Products Limited (Formerly Known as Maruti Interior Products Private Limited) key assets are its employees. In a highly competitive market, it is a challenge to address the attrition. Maruti Interior Products Limited (Formerly Known as Maruti Interior Products Private Limited) continues to accord top priority to manage employee attrition by talent retention efforts and offering a competitive salary and growth path for talented individuals.
Companys business may be affected by changes in Government policy, taxation, intensifying competition and uncertainty around economic developments in Indian and overseas market in which the Company operates.
The Company has well defined conservative internal norms for its Business. The Company ensures a favourable debt/equity ratio, moderate liquidity, strong clientele with timely payment track record, appropriate due diligence before bidding and focus on expanding presence in newer markets to minimize the impact in adverse conditions. The Company has geographically and operationally diversified into multiple countries and business segments thereby reducing its dependency on one country or market.
The Companys operations and financial condition could be adversely affected if it is unable to successfully implement its growth strategies. Competition from others, or changes in the products or processes of the Companys customers, should reduce market prices and demanding for the Companys products, thereby reducing its cash flow and profitability. Product liabilities claims may adversely affect the Companys operations and finance.
The Company does strict monitoring of prices and adopts appropriate strategies to tackle such adverse situations. The Company also adopts technological innovations to bring about operational efficiency in continuous basis to remain competitive.
The Company is exposed to risks & fluctuations of foreign exchange rates, raw-material prices and overseas investments exposures.
AUDIT AND INTERNAL CONTROL SYSTEM
One of the key requirements of the Companies Act, 2013 is that companies should have adequate Internal Financial Controls (IFC) and that such controls should operate effectively. Internal Financial Controls means the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. Your Company process of assessment ensures that not only does adequate controls exist, but it can also be evidenced by unambiguous documentation. The process involves scoping and planning to identify and map significant accounts and processes based on materiality. Thereafter, risk is identified and their associated controls are mapped, else remediation is implemented. These controls are tested to assess operating effectiveness. The auditor performs independent testing of controls. The Auditors Report is required to comment on whether the Company has adequate IFC system in place and such controls are operating effectively. Your Companys Internal Control System is robust and well established. It includes documented rules and guidelines for conducting business. The environment and controls are periodically monitored through procedures/ processes set by the management, covering critical and important areas. These controls are periodically reviewed and updated to reflect the changes in the business and environment.
RAW MATERIAL PRICES
The prices of basic major raw materials used in our manufacturing process viz. stainless steel scrap / flats of various grades doesnt affect much, as we are working in open market scenario.
During the year under review, the Company has generated total revenue of Rs. 2797.08 lac (Previous Year Rs. 1519.37 lac). The net profit before exceptional items and taxes is Rs. 411.59 lakh (Previous Year Rs. 214.97 lac). The net profit after taxes resulted into the profit for the year at Rs. 298.51 lac (Previous Year Rs. 158.60 lac).
MATERIAL DEVELOPMENTS IN HR / INDUSTRIAL RELATION / NUMBER OF PERSON EMPLOYED
Our Company believes that the human capital is key to bring in progress. The Company believes in maintaining cordial relation with its employees, which is one of the key pillars of the Companys business. The Companys HR policies and practices are built on core values of Integrity, Passion, Speed, and Commitment. The Companys focus is on recruitment of good talent and retention of the talent pool. The Company is hopeful and confident of achieving the same to be able to deliver results and value for our shareholders. As on 31st March, 2022, the total employees on the Companys rolls stood at 101.
The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. The financial statements have been prepared under the historical
cost convention on an accrual basis. The management accepts responsibility for the integrity and objectivity of the financial statements, as well as for the various estimates and judgment used therein.
DISCLOSURE OF ACCOUNTING TREATMENT IN PREPARATION OF FINANCIAL STATEMENT
The Company has followed all relevant Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI) while preparing Financial Statements.
DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS
The Company has identified the following ratios as key financial ratios:
|Sr. No. Particulars||2021-22||2020-21||Changes||Reason|
|1. Debtors Turnover||8.50||6.22||36.55||Value of sales increased 84.10% while average trade receivable increase 34.82% compare to previous year|
|2. Interest Coverage Ratio||0.05||0.08||-41.30||Earnings before interest, tax and exceptional items increase by 84.75% while interest expenses increase by 8.45% compare to previous year|
|3. Current Ratio||4.13||2.59||59.68||Increase in current assets by 142.44% and while current liabilities increased by 51.83% compare to previous year|
|4. Debt Equity Ratio||0.26||0.44||-40.54||Increase in total equity by 128.09% (i.e. fund raised via IPO (net off) proceeds and increase in profit while total liabilities increased by 35.63% compare to previous year|
DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF
|Sr. No. Particulars||2021-22||2020-21||Changes||Reason|
|1. Return on Net Worth||0.17||0.08||36.55||Increase in total equity by 128.09% (i.e. fund raised via IPO (net off) proceeds and increase in profit|
Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.
|FOR AND ON BEHALF OF THE BOARD OF DIRECTORS For, MARUTI INTERIOR PRODUCTS LIMITED|
|PLACE: Veraval||(Formerly Known As Maruti Interior Products Private Limited)|
|Paresh Purushotam Lunagaria||Purshotam Rudabhai Lunagaria|
|(DIN: 00320470)||(DIN: 00328145)|