pradip overseas ltd share price Management discussions


Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2021.

1. INDUSTRY STRUCTURE AND DEVELOPMENT:

In view of emergency situation arise in all over the world due to rapid spread of COVID-19 and it was not only affected on the health of the people but also adversely impacted on the economy of the Country as well as other rest of countries. To curtain the spread of the said pandemic disease the Central as well as State Government was declared nationwide lockdown in whole country w.e.f 25th March, 2021 and the said period was further extended by the Ministry of Home Affairs in consultation with the Ministry of Health and Family Welfare of India upto the 31st July, 2021 for containment zone. During the said period of lockdown majority activities in whole country are inoperative except the activities related to essential service. . Due to the said reason the manufacturing activities of the Company temporarily suspended in compliance of the guidelines issued by the Govt. of India. COVID-19 is significantly impacting business operation of the Company, by way of interruption in production, supply chain disruption, migration of majority of workers, closer vendors premises, closer/lockdown of production facilities etc. Even after the withdrawal of lockdown by the Govt. of India, still the Company is unable to start its operation in full capacity due to due to problems of migrant workers, shortage of working capital, disrupted supply chain, low consumer demand and majority of textile markets under the lockdown situation.

Even after the lifting of lockdown in phase wise manner it was difficult for the industries to back on track. As you aware that the Company is mainly engaged into the manufacturing of textile products i.e. Bed Sheets and other linen products. The graph of textiles industries was already on penetrate level into the Country and meanwhile, the COVID-19 situation was added fuel in fire. Despite the COVID-19 situation, the Government has focus on the various industries by implementing such schemes under the "Aatmanirbhar Bharat" and also introduces various schemes for betterment of industries.

As we are aware that in the textile industry we have to change product design, style, according to the need and perception of the consumers. After the passing of few times, their views have been change regarding design, style, texture of product and therefore, the industry has also change its product pattern to satisfy the desire of clients. Pradip (the Company) is also focus on the customer satisfaction and updates into the products from time to time according to the need of clients. In spite these challenges the Company is managed to have accurate performance which is marginally lower than the previous year due to the aforesaid reasons.

2. OPPORTUNITIES AND THREATS:

As we know that the Central as well as State Government was declared the nationwide lockdown into the country in the month of March, 2020 and majority period of fiscal year of 2020-21 was under the lockdown situation. Even there were ample of problems arises for the textile industry due to restriction on the movement of people and other commercial activities except for essential services. Despite all these problems the management of the Company is trying to overcome these pandemic situation and focus on the growth of the Company.

Pursuant to the application filed by Standard Chartered Bank before the Honble National Company Law Tribunal, Ahmedabad Bench ("NCLT") in the terms of section 7 of the Insolvency and Bankruptcy Code, 2016 read with rules and regulations framed there under ("Code"), the Honble NCLT had admitted Corporate Insolvency Resolution Process ("CIRP") against the Company vide its order dated 09th November, 2020 ("Admission Order") The NCLT had, pursuant to the Admission Order, appointed an interim resolution professional (IRP) for the Corporate Debtor vide its order dated November 09, 2020. In terms of the Admission Order, inter alia, the management of the affairs of the Corporate Debtor was vested with the IRP Subsequently, the Committee of Creditors (CoC) of the Corporate Debtor resolved with the requisite voting share, to continue the IRP as the resolution professional for the Corporate Debtor ("RP" or "Resolution Professional").

According the said NCLT order the Company operations are going concern basis and therefore, all the operations of the Company is carried under the strict supervision and monitoring of the RP.

We strongly believe that upcoming years better for the Company as compare to the current situation. We have concentrated also on overseas market along with local market of the Country

3. SEGMENT WISE PERFORMANCE:

The company is engaged only in one segment i.e. Textile. The product of the Company has been well accepted in the market. The Company is manufacturing wide range of the bed sheet and other linen products with attractive design & finishing. However, it has customer in India as well as Overseas market and therefore, the segment based on geographical location of its customer mentioned as below:

(Rs. in lacs)

Particulars Within India Outside India TOTAL
2020-21 2019-20 2020-21 2019-20 2020-21 2019-20
Sale/Income From operations 2623.32 3808.07 - - 2623.32 3808.07
TOTAL 2623.32 3808.07 - - 2623.32 3808.07

4. OUTLOOK:

Due to aforementioned reasons the Company is facing the lower demand of products in the market and also government has putted certain restriction over the import of the product from the overseas market. This was adversely effect on the price of yarn and other cotton products due to non-availability of raw materials. Even the price of fuel after the COVID-19 pandemic has been increased drastically and due to the said reason the transportation cost of movement of raw materials to finish goods increased tremendously. Though, the Company has put the trust on the development of the products and maintaining the quality of product. The management has also focus on cost cutting strategy during the purchase of various goods and materials for the carrying out the job work process.

5. RISKS AND CONCERNS:

The Company has instituted a Risk Management framework based on identification of potential risk areas, evaluation of risk intensity, and clear-cut risk mitigation policies, plans and procedures both at the enterprise and operating levels. The framework seeks to facilitate a common organizational understanding of the exposure to various risks and uncertainties at an early stage, followed by timely and effective mitigation. The Audit Committee of the Board reviews the risk management framework at periodic intervals. As the Company is under the Corporate Insolvency Resolution Process, the power of the Board of Directors have been suspended and all the management of the affairs of the Company vested with the RP During the period of CIRP, all the operations as well as financial activities of the Company are under the supervision, monitoring and handle over by the RP

6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The Companys operating and business control procedures ensure efficient use of resources and comply with the procedures and regulatory requirements. There are adequate internal controls to safeguard the assets and protect them against losses from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.

The Audit Committee periodically reviews the internal controls systems and reports their observations to the Board of Directors.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

(Rs. in lacs)

Particulars F Y 2020-21 F Y 2019-20
Revenue From Operations 2623.32 3808.07
Other Income 73.66 530.57
Profit/ (Loss) Before Depreciation, Finance Costs, Exceptional Items & Tax 2696.98 4338.64
Less: Depreciation, Amortization & Impairment Loss 961.04 964.73
Profit /loss before Finance Costs, Exceptional items and Tax Expense (15827.76) (331.72)
Less: Finance Cost 692.23 1017.75
Profit /loss before Exceptional items and Tax Expense (16519.98) (1349.47)
Add/(less): Exceptional items - -
Profit (Loss) Before Tax (16519.98) (1349.47)
Current Tax - -
Deferred Tax 1022.52 1757.84
Non-Controlling Interest - -
Profit (Loss) for the period (1) (17542.50) (3107.31)
Other Comprehensive Income (net of tax) (2)
Items that will not be reclassified subsequently to profit or loss 32.96 3.60
Items that will be reclassified subsequently to profit or loss
Total Comprehensive income for the year (1+2) (17509.54) (3103.71)
Basic & Diluted Earnings per Share ( Per share) (36.21) (6.41)

The following table set forth key financial ratios with brief explanation on changes, relevant.

Particulars 2020-21 2019-20 % of change as compared to previous year Details explanations for change
Debtor Turnover 0.32 0.23 40 Due to decreased into the sales of the Company as compared to previous year. Meanwhile the Company has book loss allowance due to un-realisation of debtors of more than 2 years.
Inventory Turnover 0.49 0.69 29 The revenue of the Company has been decreased against the inventory stock and due to that reason its effect on the inventory.
Interest Coverage Ratio (2286.50) (32.59) The Company has provision of book the loss allowance during the year 2020-21, which was un- realisation since many years. Due to the said reasons it has impacted on Earnings of the Company.
Current Ratio 7.81 6.71 - N.A
Debt Equity Ratio (1.39) (167) - N.A
Operating Profit Margin(%) (603.35) (8.71) 6856 The depreciation liabilities as well as other expenses are largely impact on the earnings before the interest and tax. During the year 2020-21 the Company has provision of loss allowance into the books of account which was un- realisation since many years. It has largely affected the EBIT of the Company. Meanwhile the revenue from operations were gone on penetrate level as compare to previous year due to the reasons as aforementioned reaosns.
Net Profit Margin (%) (629.73) (35.44) 1677 The revenue from operations has been dwindled and meanwhile the Company has provision of loss allowance which has affected greater on the Net profit/;oss of the Company.
Return on Net Worth (%) 15.96 1.57 14.39 As mentioned reason into the aforesaid para the Company has incurred huge amount losses and consequently it has affected on the returns.

8. DEVELOPMENT IN HUMAN RSOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE:

The companys manufacturing activities carried out at Changodar Factory during the entire year. Industrial relations have been conductive and cordial at factory. At the end of the year the total no. 61 employees are on permanent basis and other unskilled contract workers are working at the factory as per the requirement of production department.

The due care is being taken to ensure the good health of the employees in and around the areas of the factory of the Company. All due care is being taken to keep the clean environment in the factory of the Company.

9. CAUTIONERY STATEMENT:

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.

By Order Of the Board of Directors
For, PRADIP OVERSEAS LIMITED
Sd/-
Pradip J. Karia
Chairman and Managing Director
DIN:00123748
Sd/-
Vishal R. Karia
Chief Financial Officer and WTD
DIN:00514884
Place : Ahmedabad
Date : 14th August, 2021