The Management of Milestone Global Limited is pleased to present the following
Management Discussion and Analysis Report which contains a brief write-up on the industry
structure, opportunities and concerns, performance of the Company with respect to the
operations other information.
This chapter on Management Discussion and Analysis forms a part of the compliance
report on Corporate Governance.
Indian Economy and Industry Overview
India has emerged as the fastest growing major economy in the world and is expected to
be one of the top three economic powers in the world over the next 10-15 years, backed by
its robust democracy and strong partnerships.
Indian Economy is expected to grow at 6.6% in 2023-2024, slowing down from an estimated
6.9% in 2022-23, due to a projected global slowdown.
The Asian Development Bank (ADB) projects growth in Indias gross domestic product
(GDP) to moderate to 6.4% in fiscal year (FY) 2023 ending on 31 March 2024 and rise to
6.7% in FY2024, driven by private consumption and private investment on the back of
government policies to improve transport infrastructure, logistics, and the business
ecosystem. The growth moderation for India in FY2023 is premised on an ongoing global
economic slowdown, tight monetary conditions, and elevated oil prices. However, FY2024 is
expected to see faster growth in investment, thanks to supportive government policies and
sound macroeconomic fundamentals, lower nonperforming loans in banks, and significant
corporate deleveraging that will enhance bank lending.
Despite the global slowdown, Indias economic growth rate is stronger than in many peer
economies and reflects relatively robust domestic consumption and lesser dependence on
global demand.
The World Bank in its latest India Development update said that India showed higher
resilience to global shocks and better than expected quarterly growth numbers. Economists
at State Bank of India have estimated that India will be the third largest economy by 2029
and they projected India to grow by 6.7% to 7.7% in FY 2023.
Granite Industry- Structure and Developments
Granite is being preferred over other stones due to its resistance to wear and tear as
well as weathering which makes granite ever-lasting stone. India has one of the best
granite deposits in the world having vast varieties comprising over 200 shades. India
accounts for over 20% of the world resources in granite.
Splendid black and multi-colour varieties of granite are available in the states of
Karnataka, Andhra Pradesh, Tamil Nadu and Uttar Pradesh. Granite deposits are also
widespread over provinces of Rajasthan, Bihar, West Bengal and Gujarat.
India continues to be one of the leading countries in the production and export of
granite and other stones. India has vast resources of granite with about 125 varieties of
different colors and textures such as black, grey, pink, multi colored etc. These
varieties are used to produce monuments, building slabs, titles, surface plates etc. About
125 varieties of granites have been identified for processing as products for exports. The
deposits are widely spread over the entire country. However, popular varieties are mainly
found in South India.
By general consensus, India and Brazil have been blessed by nature with the widest
variety of the most beautiful granites. Yet, when it comes to processing facilities, their
development has been way below the potential. The volatile nature of the Brazilian economy
with lot of uncertainty over the last decade, has discouraged investment. The market share
of China in the international trade in granite has been steadily increasing in recent
years. Only China remains a threat to other countries in the manufacture and export of
granite.
Problems Related to Granite Mining Industry
• PRODUCTIVITY
The main problem of Granite Mining Industry in India is the low productivity and high
wastage. The granite mining industry in India is far behind in terms of productivity
compared to countries like Italy, Brazil, Spain, Norway, South Africa etc. The low
productivity is mainly due to conventional methods of mining adopted at present.
• MODERNIZATION
The main obstacle for modernizing the quarry is high capital investments in modern
mining equipment. Quarries are always under threat of closure due to license and
environment issues, making it difficult for them to have long term vision. Investment in
mining equipment can take several years to recover, stability and guarantee of continuity
of operations is required to make these investments
• LABOUR MANAGEMENT
The low productivity per worker and less man-hour utilization is another problem for
the granite quarrying in India. The lack of exposure to modern quarrying and training for
the Indian workers is a major reason for the low productivity of the workers. It is high
time that Government and the industry should work together to establish a Training
Institute to educate and train the work force, which will help the mining industry to a
great extent.
• LEASING POLICY
The Government should announce a long-term mining policy and stop frequent changes of
leasing policies as adopted by various state Governments. Granite mining is a high-risk
area where there is no guarantee on return on investment. The mining of a natural product
requires a long period of time to develop the land and infrastructure and high investment
for economical operations. Hence the leases of quarry lands should be on long-term basis
of minimum of 30 years as in other countries where it is normally ranging from 30 to 90
years. It is impossible for anyone to invest in machines and modernize the quarry in the
absence of long time leasing.
• EXPLORING NEW AREAS
As per the geological survey, India has a vast area of abundant granite deposits of
various colours that are still to be explored. The government should encourage
entrepreneurs to explore the new areas on recommendations as stated above. Every effort
should be taken by both the government and the granite industry to improve the countrys
share in the world market by exploring new areas.
The government should also guarantee free trading without imposing any restrictions on
exports of blocks.
• SIMPLIFICATION OF PROCEDURES
The procedures of lease agreements, permits for movement of blocks, payments of royalty
etc., must be simplified. Most of the times the dispatches are held up due to delay in
getting the permits and particularly during holidays, strike etc. Since highly valuable
goods are presently allowed on self-removal scheme, the granite blocks can also be allowed
under the same scheme in place of the present permit system.
Problems Related To Granite Processing Industries
• INFRASTRUCTURE DEVELOPMENT
The existing infrastructure to meet the needs of the stone sector in India is extremely
poor and inadequate for the growing demand. The infrastructure facilities like road,
rails, electricity services, water sources need to be improved.
The movement of either the blocks from the quarries or the containers from the
factories to the ports is always cumbersome. Quarry access roads are still not developed
which restricts the sizes and the movements of the blocks. Even the highways are not
sufficient for easy movement of trucks.
The infrastructure is the backbone for any industry to operate economically and compete
in the world market. Unless proper facilities are created for smooth traffic and movement
of materials, further development will not be possible
• AVAILABILITY OF BLOCKS
The major problem highlighted by the processing industries is the non-availability of
best quality blocks for the processing. The first quality blocks, which are free from
defects and larger in size, are always given preference for exports. Hence the local
processing factories have to depend on smaller size blocks, which resulted in high
processing wastage, higher production cost and thereby, high selling price. This is one of
the reasons for the less competitiveness of finished products in the world market. It must
be the aim for both government and the industry to expand the processing capacity of the
country to get more value addition.
• MODERNIZATION AND UPGRADATION OF PROCESSING TECHNOLOGY
The consistent modernization of the factory and upgrading of the processing technology
by installing new machines will improve the productivity and reduce production cost.
The major threat areas include:
1. Container shortage and global shipping crisis
2. Non-Availability of best quality blocks for processing.
3. Frequent power disruptions and high dependency on diesel affecting the production
and the cost of raw materials and finished goods.
4. Lack of roper infrastructure.
Prospects For The Granite Industry
In North America and Europe consistent quality control, and prompt deliveries to the
buyers are very important to procure more orders and stay in business, new products with
new design should be developed by constant up gradation of existing technology to sustain
growth.
The following factors are motivating the growth of granite industry
1. Introduction of Stones for new applications and utilities etc.
2. Spurt in demand for Indian Granites Worldwide.
3. Increased domestic demand.
Technologies advances and market competition has changed the basis feature of the
industry the margins it works with. While granite has an image of a luxury product, in the
production side, the processing industry has changed from being a low volume high margin
one to a low margin high volume business.
• The future for the granite industry for both blocks and finished products is
encouraging. India can improve its export performance as the processing capacity is very
low, with less than 8% of gangsaws installed in the world. The increase in export of
blocks and finished products during the last year is an indication of the encouraging
signs of market improvement. In spite of so many problems, the demand for granite products
is increasing everywhere with consistent growth rate of consumption.
• India, which is blessed with various types of unique colours and large deposits
of granite, is certain to get its due share in the ever-growing world market. Many
countries are worried about the strong entrance of China in the market but the fact is
that China landed up importing more rough blocks and finished products due to high
domestic demand.
• The worldwide improvement of transportation system with more and more bulk
vessels will also help many countries to import more thereby boosting our exports.
Internal Control Systems and Their Adequacy
The Company has adequate system of internal control relating to the purchase of raw
materials, Stores, Consumables and Packing Materials, and for the sale of goods
commensurate with the size of the Company and the nature of business.
The system of internal control of the Company is adequate keeping in mind the size and
complexity of your Companys business. Systems are regularly reviewed to ensure
effectiveness.
The Audit Committee of the Company meets periodically to review and recommend
quarterly, half yearly and annual financial statements of the Company.
Discussion On Financial Performance with Respect to Operational Performance
The Turnover achieved by the Company for the year ended 31.03.2023 is Rs 1457.97 Lakhs
as compared to the Previous Year turnover of Rs 1801.65 Lakhs. However, the previous
years turnover of Rs. 1801.65 included the turnover of Rs. 280.06 lakhs from the
localization business which was eventually sold off last year and the turnover pertaining
to granite business was Rs.1521.59 lakhs. Therefore, the actual decrease in turnover from
the granite business is 4.1% over the previous year. The reduction is turnover is due to
slower pace of order placement.
The Company earned a profit before tax of Rs. 88.77 lakhs as compared to the previous
years profit before tax of Rs. 88.36 lakhs. However, the previous years profit before
tax of Rs. 88.36 lakhs included the profit before tax of Rs. 30.09 lakhs from Localization
business and the net profit from granite business was Rs. 58.27 lakhs. Therefore, the
profit before tax has actually increased by 52.34% over the previous year. Despite
increase is costs we have managed to increase profitability due to a combined effect of
debt reduction and rupee weakness.
Impact on Business
During the year 2022-2023, the adverse impact on the business from COVID-19 receded.
The availability of containers and the prices gradually improved during the year.
With the cases of COVID-19 receding after 2 years of mayhem, the year 2022-2023 was
being watched as a good opportunity for the economies and the business to recover
completely from the pandemic slump. However, the war between Russia and Ukraine resulted
in oil prices surging to a record high, which in turn pushed up inflation. The spillover
effect fell upon India as well. During the year, the inflationary pressures persist in
both India and in other countries including the US and UK. The raw material and other cost
saw an increase during the year.
Due to threat of inflation, the customers became very cautious and were not ordering as
often and as freely as before.
Human Resources / Industrial Relations
The overall relation with employees has been cordial. The management has been striving
to maintain the harmonious relations and has always looked after its human resources well.
Cautionary Statement
Statement in the Management Discussion and Analysis describing the Companys
objectives, projections, estimates and expectations may be forward looking statements
within the meaning of applicable securities laws and regulations.
As forward-looking statements are based on certain assumptions and expectations of
future events over which the Company exercises no control, the Company cannot guarantee
their accuracy nor can it warrant that the same will be realized by the Company. Actual
results could differ materially from those expressed or implied, significant factors that
could make a difference to, the Companys operations include domestic and international
economic conditions affecting demand, supply and price conditions in the industry the
Company into, changes in government regulations, tax regimes and other statutes.
Details of Significant Changes in Key Financial
In accordance with the SEBI (Listing Obligations and Disclosure Requirements)
(Amendment) Regulations, 2018, the Company is required to give details of significant
changes (change of 25% or more as compared to the immediately previous financial year) in
key sector-specific financial ratios.
The Company has identified the following ratios as key financial ratios:
Sl .
No. |
Ratio |
As at
31-03-2023 |
As on 31-3-2023 |
Reason for change where change is more than 25% |
1 |
Current ratio |
5.39 times |
4.98 times |
NOT APPLICABLE |
2 |
Debt equity ratio |
0.00 |
00.84% |
The company has repaid total borrowing during the year and therefore
debt equity ratio has been improved. |
3 |
Debt Service Coverage Ratio |
12.17 times |
7.28 times |
Ratio has been improved due to decrease in finance cost |
4 |
Return on Equity Ratio |
7.47% |
8.48% |
NOT APPLICABLE |
5 |
Inventory Turnover Ratio |
1.10 % |
0.61 % |
Ratio has been increased due to increase in inventory of finished
goods |
6 |
Trade Receivable Turnover Ratio |
1.91-month sale |
2.4-month sale |
NOT APPLICABLE |
7 |
Trade Payable Turnover Ratio |
0.87-month purchase |
2.64
Month
Purchase |
Ratio has been improved due to increase in credit period |
8 |
Net capital turnover ratio |
0.39 |
0.31 |
NOT APPLICABLE |
9 |
Net Profit Ratio |
4.37% |
3.71% |
NOT APPLICABLE |
10 |
Return on capital employed |
9.75 % |
10.41% |
NOT APPLICABLE |
11 |
Return on investment (Long term) |
-50.63 |
-52.24 |
NOT APPLICABLE |
12 |
Return on Investment (Current ) |
0.95 |
|
NOT APPLICABLE |
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