PNGS Gargi FJ Management Discussions


1. INDUSTRY STRUCTURE AND DEVELOPMENT

The fashion jewellery market is driven by factors such as rising disposable income, increasing urbanization, the growing e-commerce penetration, the changing consumer preferences, and affordable pricing of fashion jewellery. The market is segmented by product type, distribution channel, and end user. The women segment amounts for majority of market share as women are the main consumers of fashion jewellery in India.

The market size of this industry is estimated to grow by USD 639. 32 million by the year 2027, at a compound annual growth rate of 8.64%.

Affordability is a key driver in the surge of the Indian fashion jewellery market. Consumers are seeking high quality pieces that offer luxurious feel without exorbitant price tags. This democratization of luxury allows individuals to embrace the latest trends without breaking the bank. This is where the fashion jewellery comes in, its affordable pricing, luxurious feel and futuristic nature are the reasons for its increasing potential in the industry.

The rise of e-commerce platforms has reshaped the dynamics of the fashion jewellery market. While traditional brick-and-mortar stores continue to thrive, online platforms offer unparalleled convenience and an extensive array of designs. The surge in online sales during the wedding season underscores the evolving consumer behaviour, where individuals prefer the ease of browsing and purchasing from the comfort of their homes.

2. OPPORTUNITIES AND THREATS

The rise in fashion jewellery market value can be attributed to the various factors such as growing globalization of brands, rising prices of gold and other precious and valuable stones and pearls, growing popularity of e-commerce platforms especially in the developing economies and increasing personal disposable income. The expanding globalization of brands, rising demand for male costume jewellery are the major drivers of growth for the global fashion jewellery market.

On the flip side, interrupted supply chains, changed purchasing behavior, aggressively increasing competition - the fashion jewellery industry is faced with a multitude of challenges. Global crises dictate the market, and algorithms fuel trends.

3. SEGMENT WISE PRODUCT WISE PERFORMANCE

The Company is engaged in the business of trading fashion jewelry, articles of silver and other articles. The resources are allocated based on the analysis of the various performance indicator of the Company as a single unit. Therefore, there is no reportable segment for the Company.

4. OUTLOOK

At an overall level, the circumstances of Financial Year 2024-25 appear better than Financial Year 2023-24. The Company has plans of expansion in the coming year which should see increase in the retail footprint of the Company. The Management is approaching the Financial Year 2024-25 with a new vigour and is confident that it will be able to overcome all the challenges that come its way.

5. RISKS AND CONCERNS Competition Risk

Competitive risk is the chance that competitive forces could prevent the Company from ) achieving its goal on account of declining revenues or margins.

Mitigation: The Companys brand "Gargi by P. N. Gadgil & Sons" is synonymous with superior quality service and affordability. The Company knows its competitors and its customers and with differentiated services and marketing strategies mitigates this risk to a greater extent.

Technology Risk

This risk includes a disruption of Companys business due to operational inefficiencies in existing technologies and IT processes.

Mitigation: The Company emphasizes on the analysis of security threats and their impact using the latest technologies which are periodically upgraded.

Market Risk

Market risk is the risk of losses in positions arising from movements in market prices.

Mitigation: The Director of the Company are vigilant on roles and responsibilities in understanding the movements and market situations.

Workforce Risk

Workforce risks can arise from issues such as critical skill shortages, increasing staff attrition or significant workforce retirement.

Mitigation: The Company trains its employees and ensures best HR practices, while carrying out improvements and rewards to attract and retain the best talent in the industry.

Policy Risk

Policy risk concerns the possibility that national governments acting in their sovereign capacity amend policy environments in ways that adversely impacts the financial stability of the Company.

Mitigation: The Company is proactive in monitoring and abiding by policies in a timely manner.

Supply chain risk

Supply chain risks include logistical, economic, political, cultural, competitive and infrastructural concerns.

Mitigation: The Company is continuously working on a comprehensive management strategy to counter supply chain disruptions through a holistic approach. By diversifying its suppliers the Company expects to moderate risk factor.

Compliance Risk

Compliance risk captures the legal and financial penalties for failing to act under internal and external regulations and legislature.

Mitigation: The Company is aware of the legal, financial, reputational, and business impact due to non-compliance risk. The Company has a system to ensure regular compliance and monitoring thereof.

6. (INTERNAL control systems and their adequacy

The internal control system is an integral part of the general organizational structure of the Company. The system is highly structured and totally in sync with the size and nature of its business. This process is aimed at pursuing the values of both procedural and substantial fairness, transparency and accountability. The internal control system is basically a set of rules, regulations, policies which allows enhanced monitoring. The organization is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.

7. GARGIS FINANCIAL PERFORMANCE

A) Analysis of Statement of Profit and Loss

• Total Income: Total income of the Company stood at Rs. 5110.12 Lakhs in FY 202324, increasing by 77.26% compared to Rs. 2882.74 Lakhs in FY 2022-23.

• Revenue from Operations: Revenue from Operations stood at Rs. 5048.49 Lakhs in FY 2023-24, increasing by 76.06% compared to Rs. 2867.36 Lakhs in FY 2022-23.

• Depreciation: Depreciation for the year under review stood at Rs.33.21 Lakhs as compared to Rs. 17.71 Lakhs in the previous year, up by Rs. 15.5 Lakhs.

• Finance Cost: Finance cost for the year under review stood at Rs.13.54 Lakhs as compared to Rs. 13.86 Lakhs in previous year.

• Other Income: Other income for the year under review stood at Rs.61.63 Lakhs as compared to Rs. 15.38 Lakhs in FY 2022-23.

• Net Profit: Net Profit for the year under review stood at Rs.845.84 Lakhs as compared to Rs. 468.34 Lakhs in FY 2022-23.

B) Analysis of Balance Sheet

• Net Worth: The Net Worth of the Company stood at Rs.2904.13 Lakhs as on 31st March 2024 as compared to Rs. 2058.29 Lakhs as on 31st March 2023. The Net worth comprised of paid up equity share capital amounting to Rs.962.80 Lakhs as on 31st March 2024 and other equity for the year stood at Rs.1941.33 Lakhs.

• Loan Profile: The Company had availed Overdraft facility (secured) of Rs. 173.13 Lakhs during the previous year.

• Total Assets: Total assets of the Company increased to Rs.3863.94 Lakhs from Rs. 2421.81 Lakhs with an increase of Rs.1442.13 Lakhs.

• Inventories: Inventories stood at Rs.3210.60 Lakhs as compared to Rs.1045 Lakhs in FY 2022-23.

• Current Liabilities: Current liabilities stood at Rs.869.73 Lakhs as on 31st March 2024 as compared to Rs.309.12 Lakhs in FY 2022-23.

• Non-Current Liabilities: Non-current liabilities stood at Rs.90.08 Lakhs as on 31st March 2024 as compared to Rs.54.39 Lakhs in FY 2022-23.

8. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Financial Year 2023-24 was marked by a strong performance across all geographies and product categories, with market share gains and improvement in operating margins, as compared to the previous Financial Year. The Revenue from operations has increased from Rs. 2867.36 Lakhs for financial year ended 31st March 2023 to Rs. 5048.49 Lakhs for financial year ended 31st March 2024. While net profit growth shows a much stronger acceleration in profitability aided by higher operating leverage.

Our focus remains on strengthening our balance sheet as we fund our expansions through our internal accruals. The strong cash flow generation has led to an improvement in overall financial ratios.

The details of Financial Performance are mentioned elsewhere in this report.

9. HUMAN RESOURCES

The Company provides a conducive work environment with equal opportunities for growth, recognizing and appreciating its employees achievements. Gargi encourages its employees to learn and share their knowledge and invests in learning and development initiatives to make them future-ready. The Company has currently has 32 number of employees.

10. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR

Particulars

2024

2023

Explanation

Debtors Turnover

52.99

1662.86

This fall is due to rise in average accounts receivable.

Inventory Turnover

1.37

1.87

This fall is due to rise in inventory.

Interest Coverage

84.79

45.77

This rise in interest coverage ratio is due to increase in EBIT which has led to more earnings being made available for the interest payment.

Current

4.24

7.37

This fall is due to the increase in current liability in higher proportion.

Debt Equity

0.06

0.04

This rise is due to availment of bank overdraft.

Operating Profit Margin (%)

22.76%

22.27%

This rise is due to increase in the EBIT in higher proportion than in relation to increase in sales

Net Profit Margin (%)

16.75%

16.35%

This rise is due to increase in the net profit in higher proportion as compared to sales.

Debt Service Coverage

34.13

20.55

This rise is due to increase in amount available for servicing the debt.

Return on Equity

34.09%

43.24%

This fall is due to increase in the average shareholders equity due to rise in share capital as a result of public issue and bonus issue of shares.

Net Capital turnover ratio

1.79

1.46

This rise is due to increase in the net sales.

Return on Capital employed

37.34%

30.23%

This rise is due to higher growth in Earnings before interest and tax

Return on Net Worth

29.13%

22.78%

This rise is due to increase in net profit after tax.

11. DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with Indian Accounting Standard ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 read with section 133 of the Companies Act, 2013.

12. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans or industry conditions or events are forward-looking statements within the meaning of applicable securities laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, competitors pricing, changes in government regulations, tax regimes, and economic conditions within India.

The Company assumes no responsibility to publicly update, amend, modify or revise any forward-looking statements, based on any subsequent development, new information or future events or otherwise except as required by applicable law. Unless the context otherwise requires, references in this document to the Company, we, us or our refers to PNGS Gargi Fashion Jewellery Limited.

Date: 06.05.2024 Place: Pune

For & on behalf of the Board PNGS Gargi Fashion Jewellery Limited

Sd/-

Govind Vishwanath Gadgil

DIN:00616617 Chairman & Director 576, N C Kelkar Road, Shaniwar Peth Opp Kesari Wada, Pune 411030