Safe Harbour
Statements in this Management Discussion and Analysis of financial condition and
results of operations of Priti International Limited describing the Companys objectives,
expectations or predictions may be forward-looking within the meaning of applicable
securities laws and regulations. Forward-looking statements are based on certain
assumptions and expectations of future events.
The Company cannot guarantee that these assumptions and expectations are accurate or
will be realized. The Company assumes no responsibility to publicly amend, modify or
revise forward-looking statements, on the basis of any subsequent developments,
information or events. Actual results may differ materially from those expressed in the
statement. Important factors that could influence the Companys operations include changes
in Government regulations, tax laws, economic developments within the country and such
other factors globally.
The following discussions on our financial condition and result of operations should be
read together with our audited financial statements and the notes to these statements
included in the Annual Report.
Unless otherwise specified or the context otherwise requires, all references herein to
‘we, ‘us, ‘our, ‘the Company, ‘PRITI are to ‘Priti
International Limited.
Economic Review
Financial year 2022-23 began amidst an uncertain macroeconomic environment. The price
pressure, which was building up since the pandemic, was aggravated by geopolitical
conflict in Europe. Supply disruptions, as a fallout of the conflict, surged inflation
across the world, including India. Sensing the serious risk of persistently higher
inflation on economic growth, RBI and the Government of India took decisive actions, which
controlled inflation from going way beyond the comfort level. Meanwhile, the release of
pent-up demand in contact-intensive services, ease of mobility restriction, near-universal
coverage of vaccination, and improved availability of consumer finance increased the
private consumption demand. While India sustained its position as the fastest-growing
major economy in the world, the lingering inflationary pressure remains a concern for the
Indian Economy.India is currently witnessing an unprecedented phase of urbanization, with
a significant number of people moving from rural to urban areas. Furthermore, the rapid
economic growth has resulted in a considerable rise in disposable income, particularly
among the middle-class population, which led to an increased demand for improved living
standards and housing facilities. Apart from this, the significant growth in the
construction industry is resulting in a heightened demand for durable and stylish
Furniture and Handicraft Items.
Industry Structure and Developments a) The Handicraft Industry:
The Handicraft sector is a highly creative sector and produces large variety of crafts
products. This industry is localized segment of the domestic and international market. In
India the production of craft products is done on both large and small scale. Because of
low capital investment people can start their business on small scale. Through this
flexibility the demand and supply can be managed.
Though Indian Handicraft industry is considered a cottage industry, but it has evolved
as one of the major revenue generator over the years. There has been consistent growth of
15% over few years and the industry has evolved as one of the major contributor for export
and foreign revenue generation.
There is huge demand for the Indian Handicraft products in both national and
international market. To match the demand and supply with quality, there is need to have
greater technological support and innovativeness with the uniqueness in industry.
Significant advances in the availability of handicraft products on various online
portals are bolstering market growth in India. Handicrafts are becoming increasingly
popular as the countrys travel and tourism industry grows. Tourists spend significant
money on souvenirs and other craft items, expanding the opportunity for local artisans and
craftspeople to produce and sell efficient handicrafts. Furthermore, rising demand for
handmade decor accessories in homes, offices, and restaurants and rising demand from the
gifting industry are propelling the market growth. The sector is economically viable with
low capital investment, high-value addition ratio and high export potential.
The Indian handicrafts industry is fragmented with more than millions of regional
artisans and over 67,000 exporters/export houses promoting regional art and craftsmanship
in the domestic and global markets.
India is one of the largest handicrafts exporting country. During April 2022-February
2023, the total exports of handicrafts stood at US$ 3 billion. Over the past three years,
the export of handmade goods has grown steadily.
b) The Furniture Industry:
India is a place for unique and excellent creative work of furniture. The Indian
furniture industry is popular in the nation and internationally because of its rich
handicraft and attractive traditional art and design. The Indian Furniture market has
evolved over time. It has broadened its market from chair and table to designed interiors
like wardrobe or sofas. Furniture has been an essential part of an Indian household for
centuries. A major part of the Indian furniture industry accounts in the unorganized
sector.
India is a place for unique and excellent creative work of furniture. The Indian
furniture industry is popular in the nation and internationally because of its rich
handicraft and attractive traditional art and design. The Indian Furniture market has
evolved over time. It has broadened its market from chair and table to designed interiors
like wardrobe or sofas. Furniture has been an essential part of an Indian household for
centuries. A major part of the Indian furniture industry accounts in the unorganized
sector.
Outlook
Priti International Limited is one of the most trusted Furniture Manufacturers in
India. Our customers know us as a top wooden and industrial furniture manufacturer in
India.We are primarily engaged in manufacturing and exporting of Handicraft Products.We
deal in manufacturing wooden, metal and textile-based furniture and handicrafts products,
upcycling and recycling of various kinds of raw, unusable and waste metal and wooden
articles.
Our customers know us as a top wooden and industrial furniture manufacturer in India.
Our Handicraft and furniture products are strong enough to stay with you for generations.
Our business model is customer centric, and order driven. We inspect, create and always
find brilliant and beautiful solutions for our customer. As an international furniture
manufacturer from India, we like to share our energy and passion for great furniture,
design and hospitality, and our relationship with our customers and suppliers is a
partnership based on trust and confidence. We have been manufacturing and exporting
beautiful furniture in India and have built a nationwide reputation for design, quality
and customer service. We believe that our business model is scalable.
Our Company caters its products majorly in export markets. Currently our Company caters
to customers located at countries such as Spain, Belgium, Holland, Netherlands, Turkey,
England, China, Greece, Germany etc. Our footsteps in international market will help us to
expand our business operations overseas. Our marketing strategy majorly comprises of
participation in fairs and product exhibitions in various geographies internationally to
reach to new customers.
Currently the Company is carrying on its manufacturing units on following locations:
1. F-43 MIA, Phase II Basni Jodhpur, 342005.
2. Khasara No. 20, Opp. Meera Sansthan, Boranada, Jodhpur, 342012
3. Khasara No. 130/2/3/4 Mogra Kallan by The Side Off JIET College Bridge, Pali Road
342802
In recent years, with the emergence of online retail and the penetration of various
e-commerce channels, the accessibility to traditional handicrafts has become more
convenient for consumers, providing a boost to the sales of handcrafted goods and
furniture locally and globally. Other factors for the resurgence in demand include:
1. Evolving consumer preferences for contemporary designs.
2. A strong demand from offices, hotels, cafes to showcase unique ambience and
experience.
3. Growing confluence of culture and consumers preference to showcase
"souvenirs" and unique products from their travel destinations.
There has been a burgeoning domestic demand for contemporary furniture, due to the
social and economic shifts in India. Reasons for the increasing domestic demand include:
G. Increasing incomes and disposable incomes
H. Increased spends on eating out and an increasingly growing hospitality industry.
I. Increased spends on boutique hotels.
J. Increased spends on home decor and owning better quality and visually appealing
furniture.
K. An increase in population, faster urbanization, higher disposable income and
increasing opportunities in India will result in a growth of the furniture industry in the
country.
Recent Government Initiatives:
National Handicraft Development program (NHDP)
The programs goal is to increase the knowledge of the entire handicrafts sector about
new design trends and colour forecasts, in order to increase Indias exports by increasing
the new design led product. The important component of this program is carrying out
surveys, upgrading design and technology, developing human resources, providing insurance
and credit facilities to artisans, R&D, infrastructure development and marketing
support activities.
Export Promotion Council for Handicrafts
Export Promotion Council for Handicrafts (EPCH) is the apex Government body and
operates under the administrative control of the Ministry of Textiles, Government of
India. EPCH has the distinction of being considered a ‘model council, a
self-sustaining body that self-finances all its promotional activities.
Opportunities and Threats
Opportunities
> Global Market: Globalization, Liberalization, and policies of Government for FDI,
etc. provide wide opportunities for export of our main products- textile, garments, and
wooden furniture.
> Domestic market in India have seen increased spending on contemporary handicraft
and furniture from homeowners as well as the hospitality industry.
> Opportunity Driven Business: With improving business eco-system, stable
macroeconomic indicators and a liberal FDI regime, it is expected to provide a boost to
the business growth and investments in the long run.
> The Corporation can improve its results by installing new and upgraded
manufacturing facilities.
> Increased accessibility, demand and knowledge of handicraft designs due to
ecommerce websites, including dedicated pages such as "Amazon Kaarigar" on
global E-Commerce giants have increased in faster adoption of the handicrafts and
furnitures.
> India has had a rich tradition of handicrafts and hand-made products. Our
government firmly believes that technology upgradation holds the key to the expansion of
handicrafts sector.
Threats
> Global Competition: Different countries are positioning themselves in Handicraft
export by increased and better technological support and advanced Research &
Development facility in the competing countries.
> Industry Structures: Competition from manufacturer exporter as well as private
players who have a lean structure and flexible policies.
> Changing customer preferences and uncertainty in season change predictability
requires the companies to be flexible and quick as well to keep pace with the changing
expectations.
> Availability of wood such as timber and need of source country certificates.
> Interest Rate fluctuations and Banking crisis in foreign nations.
Risks and Concerns
Like every business, the Company faces risks, both internal and external, in the
undertaking of its day-to-day operations and in pursuit of its longer-term objectives.
The Company faces the following risks and concerns:
Credit Risk:
To manage its credit exposure, The Company has determined a credit policy with credit
limit requests and approval procedures. The Company does its own research of a
counterpartys financial health and project prospects before bidding for a project. The
Company has suitably streamlined the process to develop a focused and aggressive
receivables management system to ensure timely collections.
Interest Rate Risk:
The Company has judiciously managed the debt-equity ratio. It has been using a mix of
external financial assistance and internal cash accruals. The Company has also well
managed the working capital to reduce the overall interest cost.
Competition Risk:
Like in most other industries, opportunities for growth tend to lead to increase in
competition. We face different levels of competition in each of our segments, from
domestic as well as multinational companies. The Company has created strong
differentiation in products, project execution, quality and delivery which make it
resilient to competition. The Company strives to remain competitive with the quality of
infrastructure, customer-centric approach and ability to innovate customer-specific
products, strong focus on pricing and strategic marketing strategy, and disciplined
project executions, coupled with prudent financial and human resources management and
better control over costs.
Raw Material Cost:
Risk, Profitability and cost effectiveness may be affected due to changes in the prices
of raw materials, power and other input costs. Some of the risks that are potentially
significant in nature and need careful monitoring, include raw material prices, and the
availability of labour, power and others.
Internal Control System and Their Adequacy
The Company has established a strong and well-embedded internal control system
commensurate with its size and operations. The Company has adequate internal controls and
standard operational processes to ensure protection of assets, prevention and early
detection of frauds and errors, accuracy and completeness of the accounting records, and
timely preparation of reliable financial information and to maintain business efficiency.
The internal control and risk management system is designed and applied as per the
principles and criteria outlined in the risk management policy of the Company.
There has not been any significant change in such control systems. The control systems
are reviewed by the Management regularly. The same is also reviewed by the Internal
Auditors from time to time. Additionally, the Company has adopted various policies and
procedures to safeguard its interest. These policies and procedures are reviewed from time
to time. A proper reporting mechanism has been implemented in the organization for
reporting any deviation from the policies and procedures.
The Statutory Auditors of the Company have reported unmodified opinion on the adequacy
and operating effectiveness of the Companys internal financial controls over financial
reporting for the FY 2023.
Discussion on Financial performance with respect to operational performance
Revenue from operations increased to ?82.85 crore in FY 2023 compared to ?57.25crore in
FY 2022. A growth of 44.71% since last year. The Company was able to have significant
growth of Revenue from operations in the market compared to its peers.
EBITDA increased to ?10.42 crore in FY23 from ?6.35 crore in FY22. A growth of 64.22%
since last year.
Profit after tax increased to ?7.12 crore in FY23 from ?4.38 crore in FY22.A g rowth of
62.64% since last year.
PRITI HOME:
The Company also launched its new brand "PRITI HOME".
Priti Home is a brand of online Wooden Furniture store for Quality Home & Office
Furniture in wide range of varieties and Style.
The Company through its websites generates a significant number of customers. As our
business in customer focused, we keep developing new ideas to promote our business to all
category of customers.
BENGALURU STORE:
During the year, the Company launched its offline store in the city of Bengaluru,
Karnataka. As a part continuing growth of the Company, this offline store of the
"PRITI HOME" enabled the rise in the marketing of products to outreach the South
region of India.This Store is situated at 13, 15th cross Rd, Sarakki, J.P. Nagar,
Bengaluru, Karnataka 560078.
The Company has the robust presence on all major social media platforms, such as
Instagram, Facebook, YouTube, LinkedIn, Amazon, Flipkart and other E-Commerce Market
Place. We have a young and dedicated team that manages our social media handles, keeping
our customers and followers updated on our products. And Having the Offline Store is enabling
the direct customer interaction resulting in increase in Revenue generation of the
Company.
Segment-wise or product-wise performance
The Company is engaged in the business of handicrafts and currently operates in two
segments viz.
A) Wooden and Iron Handicraft; and
B) Textile Handicraft.
A) Wooden and Iron Handicraft:
Revenue from operations increased to ?82.05 crore in FY23 compared to ?56.20 crore in
FY22.
EBIT increased to ?36.81 crore in FY 23 compared to ?18.91 crore in FY22.
B) Textile Handicraft:
Revenue from operations declined to?79.73 Lakhs in FY23 compared to ?1.06 crore in FY22,
due to pivot of the company and increased focus towards wooden and handicraft segment.
For Textile and handicraft space the Company incurred loss before interest and tax which
is ? (0.31) crore in FY23 compared to ?(0.43) crore in FY22. The Company expects to
have control over cost and increase the profit margin in further years. The Company is
hopeful of better and positive results in near future for this segment.
The Company has provided detailed financial performance of its segments the
"Segment Reporting" section of its Financial Statements, which forms part of
this Annual Report.
Material Developments in Human Resources/Industrial relations front, including number
of people employed:
The Company has Human Relations policies in place, which are reviewed and updated
regularly in line with the Companys strategic plans. The human relations team
continually conducts training programs for talent development. The Company aims to
develop the potential of every individual associated with it as a part of its business
goal.
The Company values its human resources as the principal drivers of change. The Company
focuses on providing individual development and growth in a work culture that encourages
teamwork and high performance.
Financial Performance and Analysis
The discussions in this section relate to the financial results pertaining to the year
that ended March 31, 2023. Significant accounting policies used in the preparation of the
financial statements are disclosed in the notes to the financial statements.
The following table gives an overview of the financial results of the Company:
Rs. Crores
|
FY 2023 |
% of Revenue |
% Growt h |
FY 2022 |
% of Revenue |
| Revenue |
82.85 |
100.00% |
44.72% |
57.25 |
100.00% |
| Earnings before interest, tax, depreciation, and amortization (before other income) |
10.42 |
12.58% |
64.09% |
6.35 |
11.10% |
| Profit Before Tax (PBT) |
9.54 |
11.51% |
57.69% |
6.05 |
10.57% |
| Profit after tax attributable to shareholders of the Company |
7.12 |
8.59% |
62.56% |
4.38 |
7.64% |
| Earnings per share (in Rs.) |
6.50 |
- |
54.03% |
4.22 |
- |
Ratio Analysis:
The Company has witnessed a significant change in the financial ratios as compared to
previous year which are as follows:
| S.no. |
UNITS |
31-Mar-2023 |
31-Mar-2022 |
| Ratios -Financial Performance |
|
|
|
| i. Operating Profit Margin |
% |
12.05 |
10.63 |
| ii. Net Profit Margin |
% |
8.59 |
7.64 |
| iii. Return on Net Worth |
% |
61.24 |
42.16 |
| Ratios -Growth |
|
|
|
| i. Total Revenue |
% |
41.64 |
54.57 |
| ii. EBITDA |
% |
64.01 |
41.40 |
| iii. Profit After Tax |
% |
62.64 |
41.90 |
| Ratios- Balance Sheet |
|
|
|
| i. Debtors Turnover |
Times |
8.2 |
12.53 |
| ii. Inventory Turnover |
Times |
12.53 |
9.74 |
| iii. Interest Coverage Ratio |
Times |
372.70 |
163.30 |
| iv. Current Ratio |
Times |
3.96 |
3.58 |
| v. Debt Equity Ratio |
Times |
N.A |
0.3 |
Detailed Explanation on Change in Return on Net Worth:
During the Year under review, the Paid-up Capital of Company has been increased by
reason of preferential issue and subsequent conversion of Share Warrants into Equity
Shares which has in turn resulted into increase in Net-worth of the Company. Further, by
reason of above, the Return on Net-worth has reduced to 17.24% as compared to previous
years Return. Further, during the overall profitability of Company has increased as
compared to previous years.
|
For & on Behalf of Board of Directors of |
|
Priti International Limited |
| Date: September 01,2023 |
Goverdhan Das Lohiya |
| Place: Jodhpur |
Chairman |
|
DIN: 07787326 |
+91-9892691696
