INDUSTRY STRUCTURE AND DEVELOPMENT OPPORTUNITIES, THREATS, RISKS,
CONCERNS AND OUTLOOK: -
Indias GDP is projected to grow by 6.5% in FY 2023-24. Rebound of
private consumption, higher capex, increased spending on contact-based services, reduction
in housing market inventory, strengthening of corporate balance sheets, good health of
public sector banks and willingness to increase credit supply to MSMEs are among the
factors supporting the optimism in growth in Indias economy.
Retail price inflation peaked at 7.4 per cent in September 2022 and
have since begun to ease, helped by favourable base effects. It fell to 5.7 per cent in
March 2023. Inflation is expected to gradually rolling off in FY 2023-24. This shall lead
to positive impact on consumer sentiments and consequent growth in business.
Overview
The Company achieved a record 3079 Crores revenue in the year under
review. The Material Handling & Furniture Division grew by 14 % & 16 %
respectively. The Company processed & sold approx. 1,35,000 MT in last financial year.
Although delayed by three Quarters, the Company has successfully
completed the acquisition of 76.06 Acres of land for its new green field Project at Hosur.
The construction of the Continuous Foam Plant, Mattress Plant and Ready furniture Plant is
expected to be complete and commercial production to begin in Q1 of FY 2024-25. The
Company has successfully built in-house, the know-how of production of high volume, high
quality Ready Furniture, Steel Furniture, leading to import substitution & reduction
of Furniture import which will further accelerate in time to come. Current year, the
Company shall process Ready Furniture of over 3 Lakhs Boards up from 1.8 Lakhs Boards
processed last year. Company aims to further increase capacity to over 5 Lakhs Boards per
annum in the next year. The Company shall process 3600 tonnes of Steel Furniture up from
1800 Tonnes from previous year. The Company shall produce over 50,000 Office Chairs &
12,000 Sofa sets in the current year and will continue to increase capacity year on year.
The Material Handling Division has developed Customer Centric Solutions
building long term association & high stickiness with the Customer. The Racking
Business saw continued increase in demand. The Company has established itself as a
respected Partner for special needs of the Customer.
The Bubbleguard business has increased by 62% providing innovative
solutions to the packaging, printing and develop innovative returnable packaging solutions
to the automotive & logistic industry. New capacity will be added and commercial
production will commence in Q1 2024-25.
Sustainability
After achieving zero water discharge & adopting renewable energy
(Solar and/or wind) in all plants, the company has taken a step forward to reduce
environmental impact for a sustainable future.
Use of wind energy in Hosur factory has been increased from 7 million
units /annum to 10 million units/ annum. Further automation has been introduced in
assembly lines resulting in improved manpower efficiency, reduced power consumption and
reduced discharge.
Innovative steps have been taken to reduce greenhouse emissions &
even encouraging our vendors to adopt green supply chain practices. A companywide tree
plantation drive has been initiated aimed towards carbon neutral future. Considering all
these steps, our Puducherry plant has received a Gold award by CII for adopting Green
factory approach.
The company has also revised Energy policy to further sensitive the
employees for energy conservation and making energy conservation as a decision-making
criterion for investments.
Plastic Division
For the Financial Year 2022-23 the Plastic Business exhibited a volume
& value growth of 8 % & 15% respectively. It has achieved total turnover of 2852
Crores as compared to 2479 Crores in the previous year.
The furniture business had a mixed bag of results in FY 22-23.
The moulded furniture business continued its dominance with a 10 % value growth over last
year. The overall moulded furniture segment continues to experience a strong competition
from local/unorganized players. The bottom of the pyramid product range experienced
significant price war coming from the unorganized sector. Hence, the company, over the
last few years, has been focusing on improving the product mix keeping in mind the
ever-changing consumer preference and moving up the value chain with a larger play in the
mid to premium price segment. Going forward, the company intends to continue introducing
new products based on deep consumer research and available market gaps. Additionally, the
company has been continuously working towards infusing technology to improve operational
efficiency. As part of the strategy, the company successfully launched its Order
Management System (OMS) across its primary dealer network. This will ensure seamless
visibility of stock availability and will also help in better inventory management.
The Ready Furniture business, comprising of knock-down furniture
in wood, metal, and glass, remains a focus area for the company. The range sells across
all major channel comprising of trade, retail, and e-commerce. In the last 2 years, the
company had a major focus in building the retail channel for this category. The retail
channel helps the company to showcase the entire product range to its prospective
customer. The total count of stores now stands at 100 with an overall retail space of
close to 4 lac sqft. The company plans to add another 2 lac sqft retail space in the
coming year. The Ready Furniture business helps the brand pivot itself beyond plastic
furniture and capture the complete home furniture segment. Hence the company has invested
in building a state-of-the-art manufacturing facility for Ready Furniture. Over the last
couple of years, range of products have been indigenously designed and manufactured in its
facility in Hosur. Going forward the company intends to continue the "Make in
India" focus which will in turn reduce the dependence on imports and will ensure
price and supply consistency of the Ready furniture range. The company also intends to
further leverage the existing trade channel network, that has been built over the years,
to market its ready furniture range. As part of this strategy, the company will launch
exclusive product range to help with a deeper penetration in the trade and large format
multi-brand retail outlets.
The company experienced a setback in the mattress category in FY
22-23. The momentum gathered in the last couple of years on channel expansion, slowed down
during last year, resulting in a flattish sale. The company is putting together an action
plan to get back the growth momentum in the mattress category. Firstly, the company will
work towards building a stronger brand equity in the mattress segment. including celebrity
endorsement. This will help in creating a stronger brand visibility in an otherwise
cluttered market and also have a positive rub off on the brand. Secondly the overall
product assortment will be overhauled to ensure that the offering is sharp and customized
to the consumer needs.
The Ecommerce business registered its highest ever numbers in FY
22-23. The consistent effort to improve the online presence has helped the business garner
a 39 % growth over last year. The growth was fuelled by online exclusive product line,
better customer experience, improved logistic system and a focussed investment in
technology and marketing. The company continued its focus on building a strong Direct to
Customer (D2C) model. The company also redesigned the brand websites to deliver a better
buying experience to its customers. The company expanded the online delivery services to
4000 additional pin codes taking the total count to 12000 pin codes PAN India.
In India, the GST collections showed continuous Q on Q growth, which
indicates a positive shift towards GST Compliance & Organised Businesses. This shift
will immensely benefit the Company in the years to come specially to its Furniture &
Mattress Business.
The Lifestyle Furniture, Furnishing and Accessories Division (@home)
registered a revenue of 227 Crores in FY 22-23, a growth of 29% over last financial
year. The division witnessed growth mainly from newly appointed franchise stores in the
preceding year, online channel, and a lower base effect. @home will continue to expand its
footprint through franchise, focussing in the same markets it operates its stores to
rationalise costs and achieve operational efficiency. At the end of the financial year,
@home had 30 stores with 17 company owned stores and 13 franchised stores across India
with a total retail space of 3.5 lac sqft. The BubbleGUARD product category has
continued to grow at 62% in sales and 43% volume – albeit on lower base for the
second year in a row as the returnable packaging market grows in India. There was an added
benefit of softer raw material prices which made the solutions cost saving as well as
sustainable for our customers.
The category continues to grow through innovation as we have expanded
the product offering to the textile, glass and automotive industry with highly customized
solutions. The division has committed capital to more than double the production and
fabrication capacity.
Financial Year 2022–2023 for Material Handling business
closed on a strong note of growth, with revenues growing by 14 %.
This business continued in its endeavor to provide value propositions
in terms of protecting customers products, improving customers storage
efficiency and increasing customers labour productivity.
With India making a remarkable recovery from the effects of the
COVID-19 pandemic, the year witnessed a surge in production activity in all industries.
The Governments Production Linked Incentive schemes, higher Capital Expenditure,
stabilised supply chains and revitalised consumer sentiments created a boost in demand for
our crates designed to reduce reverse logistic costs, plastic pallets as well as our metal
material movement and racking solutions.
Investments done over the previous years for increasing our production
capacities in order to get closer to our customers proved to be timely, enabling us to
provide quick & quality solutions to our customers material handling
requirements.
Sales of our products for waste management & road safety continued
to see potential thanks to Governments initiatives of Swachha Bharat drive and
infrastructure developments. Our WHO certified vaccine carriers were much used, not only
in the Worlds second largest vaccination drive that was carried out in India, but
also in other developing countries. Our racking business saw a growth of 24 %.
Our hospitality solutions venture Cambro Nilkamal Private Ltd.
grew by 53 %. We added many products to support safe food storage and transportation, and
are now venturing to be a one stop shop for solutions for the food service industry.
As a result, this year saw us further strengthening our brand position
as a "One Stop Shop for Material Handling Solutions".
However, the year also saw a hike in inflation in advanced economies
induced by the pandemic affecting important ventures including some ecommerce projects.
Another important concern was the Russian- Ukraine conflict leading to worldwide surge in
inflation, and rise in crude prices, impacting raw material prices. These two concerns and
disruptions in agriculture sector due to climatic changes will continue to be challenges
to revenue growth and profitability for the Companys business as a whole.
To Summarise : The increasing compliance of GST and resulted shift
towards organized business, stability in raw material price, relative stability in
currency movement would be the positive factors, while adverse fluctuation or uncertainty
in geopolitical environment and increasing inflation can be a cause for concern.
Financial Review
The significant changes in the financial ratios of the Company, which
are more than 25% as compared to the previous year are summarized below: -
| Ratio |
Particulars |
Financial Year |
Financial Year |
Change |
Reason for |
|
|
2021-22 |
2022-23 |
(%) |
change |
| Interest Coverage Ratio |
Standalone |
23.76 |
15.38 |
(35%) |
Additional |
|
Consolidated |
24.17 |
16.28 |
(33%) |
long-term borrowing for |
| Debt-Equity |
Standalone |
0.15 |
0.15 |
(1%) |
meeting Capex |
|
Consolidated |
0.15 |
0.14 |
(7%) |
requirement |
| Current Ratio |
Standalone |
2.83 |
3.15 |
11% |
Growth in |
|
Consolidated |
2.85 |
3.20 |
12% |
business alongwith |
| Debtors Turnover (days) |
Standalone |
35 |
37 |
4% |
|
|
Consolidated |
36 |
37 |
|
Improved profitability |
| Inventory Turnover |
Standalone |
77 |
78 |
1% |
& increase |
|
Consolidated |
79 |
78 |
(1%) |
in operating |
| Operating Profit Margin % |
Standalone |
8.19% |
9.75% |
19% |
Cash flow. |
|
Consolidated |
8.32% |
10.09% |
21% |
|
| Net Profit Margin % |
Standalone |
3.10% |
3.97% |
28% |
|
|
Consolidated |
3.06% |
4.28% |
40% |
|
| Return on Capital Employed |
Standalone |
9.42% |
12.82% |
36% |
|
|
Consolidated |
9.05% |
13.41% |
48% |
|
| Return on Net Worth |
Standalone |
7.37% |
10.15% |
38% |
|
|
Consolidated |
7.13% |
10.65% |
49% |
|
RISK MANAGMENT
The risk is inherent to the business and your Company is committed to
managing the same in a proactive and efficient manner. The Company periodically assesses
risks at all its locations and functions.
Product quality and services, Health, Safety, Security – Human,
Technology and of other resources, external Environment, Procurement & Pricing, SCM,
Working Capital, Treasury, Design & Development, Sustainability and enviornmental,
Legal compliance are critical risk for the Company. The Company has a mitigation plan in
place to identify such risks , its management through continuous monitoring and mitigating
actions. This ensures business continuity and value creation on sustainable basis.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company have placed internal financial controls in the form of
procedures and policies. The Companys internal control systems are commensurate with
the nature of its business and the size and complexity of its operations.
The annual audit plan duly approved by Audit Committee aims to evaluate
the efficacy and adequacy of said internal controls placed by the Company and its
compliance(s) across all the locations. Internal Audit department with the help of the
external professional agencies carries out the said responsibility.
Based on the reports of internal audit, process owners undertake
corrective action in their respective areas. Significant audit observations and corrective
actions thereon are presented to the Audit Committee of the Board. The Management is of
the opinion that your Company maintained effective internal control over financial
reporting.
Human Resources and Industrial Relations
Your Companys industrial relations continued to be harmonious
during the year under review. The employee strength of your Company is currently 3493.
Cautionary Statement
The Management Discussions and Analysis Statement made above are on the
basis of available data as well as certain assumptions as to the economic conditions,
various factors affecting raw material prices, selling prices, trend and consumer demand
and preference, governing and applicable laws and other economic and political factors.
The management cannot guarantee the accuracy of the assumptions and projected performance
of the Company in future. It is therefore, cautioned that the actual results may differ
from those expressed and implied therein.
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