Nirbhay Colours India Ltd Management Discussions

OVERALL REVIEW, INDUSTRY STRUCTURE AND DEVELOPMENTS:

India continues to be one of the fastest-growing major economies in the world, driven by consumption-led growth, demographic advantage, and government-led infrastructure development. According to the Economic Survey 2021 22, India?s economy reached an estimated US$ 2.9 trillion in 2019, surpassing the United Kingdom and France, making it the fifth-largest economy globally (in GDP at current US$ terms).

The Union Budget 2019 20 had laid out a clear vision to transform India into a US$ 5 trillion economy by 2024 25. However, external headwinds and domestic slowdown have moderated the pace of GDP growth. Despite these challenges, India remains poised to achieve this ambitious milestone, building on its strong fundamentals of macroeconomic stability, robust fiscal management, and an average annual growth rate of 7.5% over the past five years.

To support this vision, the Government of India has proposed a massive investment of approximately US$ 1.4 trillion ( 100 lakh crore) in infrastructure through the National Infrastructure Pipeline (NIP). This is aimed at improving logistics, enhancing the ease of living, boosting job creation, and ensuring equitable access to infrastructure. The success of the NIP is expected to catalyse inclusive and sustainable economic growth across sectors.

1. Policy Reforms and Industrial Development Initiatives

The Government has undertaken several strategic initiatives to drive industrial development and attract investment, including: Start-up India, Make in India, Ease of Doing Business reforms, FDI liberalisation across sectors. These initiatives have helped India improve its global competitiveness, with the country ranking 63rd out of 190 countries in the World Bank?s Doing Business Report, 2020, marking a significant improvement in ease of doing business.

2. Infrastructure and the Role of Gujarat

A well-developed and resilient infrastructure is essential to support the growth of manufacturing and industrial activities. Infrastructure development not only facilitates smooth supply chains and market access but also contributes significantly to productivity and economic efficiency.

The State of Gujarat, where Nirbhay Colours India Limited is headquartered, has historically enjoyed superior industrial infrastructure compared to many other Indian states. With a robust network of roads, ports, and industrial parks, Gujarat remains an attractive destination for manufacturing and logistics operations. The state government continues to invest in upgrading existing road networks, developing multi-lane highways and expressways, and implementing smart urban planning to cater to growing traffic and business demands.

As an enterprise engaged in pigment, dye, and specialty chemical production, Nirbhay Colours India Limited benefits significantly from this infrastructure-led growth. The expansion of urban infrastructure, residential complexes, malls, and industrial projects across the country creates rising demand for decorative, industrial, and performance coatings thereby providing a solid foundation for the Company?s continued growth.

OPPORTUNITIES AND THREATS

Opportunities

As Nirbhay Colours India Limited embarks on a strategic transition from its traditional focus on pigments, dyes, and industrial chemicals to include handicrafts and artisan products, several new growth avenues have emerged, supported by favourable macroeconomic trends, government incentives, and evolving consumer preferences.

1. Expanding Market Size in the Handicraft Sector: India?s growing middle class, rapid urbanization, and rising disposable incomes have significantly increased demand for authentic, handmade, and culturally rich handicrafts both for domestic consumption and international exports. The demand spans across home decor, lifestyle accessories, souvenirs, and customized gifting items. This trend offers an attractive opportunity for the Company to diversify its product portfolio and tap into a fast-growing segment driven by aesthetic appeal and sustainable production.

2. Infrastructure-Led Growth Fueling Decorative Needs

With large-scale investments in infrastructure, smart cities, affordable housing, and commercial real estate, there is rising demand for aesthetically pleasing interiors and culturally integrated design elements. Handicrafts are increasingly finding their way into residential, hospitality, and retail design projects, further expanding market opportunities for the Company?s new vertical.

3. Housing, Real Estate, and Retail Expansion: The growth of malls, multiplexes, townships, and hospitality chains has led to an increased focus on interior styling, curated spaces, and decorative themes. This enhances the demand not only for traditional coatings and paints, but also for artisanal products, such as wall art, sculptures, hand-painted tiles, and handcrafted furniture. Nirbhay Colours is well-positioned to serve this intersection of decor and cultural utility.

4. Sustainability and Eco-Friendly Craftsmanship: Consumers globally are shifting toward eco-conscious and ethically produced goods. Handicrafts made from natural, recycled, and biodegradable materials align perfectly with this trend. With our planned R&D investments and artisan collaborations, the Company is exploring sustainable production models, ensuring minimal environmental impact while promoting traditional craft practices.

5. Export Potential for Indian Handicrafts: India remains one of the world?s largest exporters of handicrafts, with strong demand from countries in Europe, North America, Southeast Asia, and the Middle East. Nirbhay Colours India Limited is exploring opportunities to scale its export footprint through participation in global trade fairs, e-commerce partnerships, and government-backed export promotion schemes focused on handicrafts and handmade goods.

Threats

While the diversification into the handicraft sector brings exciting prospects, the Company remains mindful of several risks and challenges that need to be addressed for successful execution:

1. Intensifying Competition: The handicraft industry is fragmented and highly competitive, with numerous unorganised players, small artisan clusters, and online marketplaces offering similar products. Differentiation through quality, design innovation, and branding will be essential to establish a unique identity in this space.

2. Volatility in Input Costs and Artisan Availability: The availability and cost of quality raw materials (such as natural wood, metals, fabrics, dyes) and skilled artisans are subject to regional and seasonal fluctuations. Maintaining consistency in supply, fair trade practices, and productivity will be critical for scaling operations.

3. Regulatory, Cultural, and Compliance Concerns: Handicraft exports require compliance with a variety of regulations including intellectual property rights (for traditional designs), export licenses, quality certifications, and labour laws. The Company will need to invest in building a robust compliance framework and sustainable sourcing mechanisms.

4. Competition from Other States and Countries: Several Indian states such as Rajasthan, Uttar Pradesh, Gujarat, and West Bengal have long-established handicraft ecosystems supported by state-led subsidies and export infrastructure. Internationally, countries like Indonesia, Vietnam, and Morocco are also emerging as low-cost competitors in the global handicraft market. To remain competitive, the Company must leverage design innovation, digital channels, and customer engagement.

The broader economic landscape and consumer sentiment continue to support India?s position as a hub for traditional artistry, sustainable living, and creative enterprise. As Nirbhay Colours India Limited transitions into the handicraft segment, it brings with it a legacy of quality manufacturing, supply chain discipline, and global market understanding developed through years in the pigments and chemicals industry.

This diversification marks a strategic inflection point for the Company, aligning its vision with the evolving aspirations of Indian craftsmanship, sustainability, and design excellence. Backed by strong leadership, efficient resource management, and market-driven strategies, the Company remains confident in its ability to deliver sustainable growth, create stakeholder value, and make a meaningful contribution to the global handicrafts movement.

SEGMENT WISE PERFORMANCE

The Company has identified its activities as single segment containing more than 50% of the total income. Hence, the Companys performance is to be viewed as a single segment company operating in Advertising and media marketing activities. The Company has been planning to venture into the chemical sector very soon.

INTERNAL CONTROL SYSTEM

In any industry, the processes and internal control systems play a critical role in the health of the Company. Company?s well-defined organizational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. Moreover, the Company continuously upgrades these systems in line with the best available practices. Internal Auditors independently evaluate the adequacy of internal control systems. Their observations and recommendations are discussed by the Audit committee to ensure effective corrective action. The internal control system is supplemented by extensive internal audits, regular reviews by management and adherence to standard policies and guidelines to ensure reliability of financial and other records. The management information system provides timely and accurate information for effective control. Rigorous business planning as well as expense, capital and manpower budgeting processes ensure that progress is monitored against targets, and control is exercised on all major expenses.

HUMAN RELATIONS

Human Resources (HR) are an integral and important part of any organisation. The Company has put in place sound policies for the growth and progress of its employees. Individual performance management systems are being implemented to encourage merit and innovative thinking. Roles and responsibilities are clearly defined at all levels. It has a well-drawn recruitment policy and a performance-based compensation policy to enable the employees to develop a sense of ownership with the organisation. Company recognises the importance of providing training and development opportunities to its people to enhance their skills and experience, which in turn enables the Company to achieve its business objectives.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

As mentioned in clause B (i) of Schedule V read with Regulation 34(3) and 53(f) of the SEBI (Listing and Disclosure Requirements) Regulations, 2015 specifying requirement of additional disclosure as inserted by the SEBI (Listing and Disclosure Requirement (Amendment) Regulations, 2018 applicable w.e.f. 01.04.2019, it is confirmed that, there is no significant change in any ratios for more than 25% as compared to previous financial year 2022-23.

FINANCIAL PERFORMANCE

During the year, the Company has recorded a turnover of Rs. 286.39 Lakhs as compared to Rs.191.83 Lakhs in the previous year. The Company has made net profit of Rs 7.32 Lakhs as compared to Rs. 121.79 Lakhs of the previous year after providing depreciation, tax, etc.

DETAILS OF KEY FINANCIAL RATIOS:

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis Report describing the Company?s projections, estimates and expectations may be interpreted as “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Company?s operations include economic conditions affecting demand/supply, price conditions in the domestic markets in which the Company operates, changes in Government regulations, tax laws and other statutes. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent development, information or events.

CONCLUSION

The Directors place on record their sincere appreciation for the cooperation and support received from investors, our dear shareholders, customers, business associates, vendors as well as regulatory and governmental authorities.

The Directors appreciate the invaluable contribution of the management team in performing an outstanding job in taking the Company to greater heights and also thank the employees for the significant contribution made by them to the Companys progress.

We would like to specifically thank your chairman for the untiring work in the re-organization of our company.