Priti International Ltd Management Discussions

Industry Structure and Developments

a) The Handicraft Industry:

Handicrafts is one of the most important sectors in the Indian economy employing more than seven million people. This sector is a highly Creative sector and produces a large variety of crafts products. This industry is a localized segment of the domestic and international market. In India the production of craft products is done on both large and small scale. In India it is dominated by female artisans with over 56% of the total artisans. Because of low capital investment people can start their business on a 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 generators over the years. There has been consistent growth of 15% over a few years and the industry has evolved as one of the major contributors to 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. The significant advances in the availability of handicraft products on various online portals are bolstering market growth in India. Thus, 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.

The handicrafts market in India achieved a size of US$ 4,277.5 million in 2023 and is projected to reach US$ 7,817.8 million by 2032, with a compound annual growth rate (CAGR) of 6.9% during the period of 2023-2032, according to IMARC Groups forecasts. The market growth in India is driven by significant improvements in the accessibility of handicraft products on various online platforms. Additionally, the surge in travel and tourism within the country is driving a notable increase in the popularity of handicrafts. Tourists are increasingly investing in souvenirs and other crafted items, thereby creating opportunities for local artisans and craftsmen to develop and market their high-quality handicrafts efficiently.

b) The Furniture Industry:

The Indian Furniture market has evolved over time. 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.

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. It has broadened its market from chair and table to designed interiors like wardrobe or sofas.

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. India is a place for unique and excellent creative work of furniture. 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 customers. 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, Greece, Germany, USA etc. Our footsteps in the 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 new customers.

Currently the Company is carrying on its manufacturing units on following locations:

1. F-43 MIA, Phase I 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.

Recent Government Initiatives:

Pradhan Mantri Vishwakarma Kaushal Samman (PM-VIKAS)

This Scheme was launched on 17th September 2023.

The Scheme envisages providing end-to-end holistic support to the traditional artisans and craftspeople in scaling up of their conventional products and services. The objectives of the scheme are giving recognition to artisans and craftspeople as Vishwakarma, their skill upgradation, supporting them for better and modern tools with easy access to collateral free credit.

Craft clusters of India

An initiative of DC, Handicrafts, Ministry of Textiles, Govt. of India to showcase different products made by Cluster Artisans across India. Artisans are provided with technical / marketing know-how for making these products by implementing agencies which are partnered by DC, Handicrafts for the upliftment of these Artisans. The portal showcases 35312 products under 32 different categories. The buyer can reach the product through Craft / Sub-Craft, Product / Sub - Product & Region. Once you reach a product, you can view the product details and the cluster details where the product was made. It is an effort to provide a market linkage to these Artisans/Clusters so that buyers / exporters can get in touch with them directly for sending enquiries for the products.

National Handicraft Development program (NHDP)

The NHDP scheme envisages a package of support to the handicraft clusters and artisans which inter-alia include basic inputs and infrastructure support in addition to capacity enhancement to cater to target market.

The main focus area of the schemes is to bring every handicraft artisan into a mainstream while preserving & ensuring continuation of prestigious crafts of the country by providing marketing platforms for handicraft products, resilient infrastructure support, and skilling

new entrants through numerous kinds of design and skill training programs and thus focus on capacity building for the sector.

Comprehensive Handicrafts Cluster Development Scheme (CHCDS)

CHCDS aims to artisans and entrepreneurs in establishing world-class units with modern infrastructure, cutting-edge technology, adequate training and human resources development inputs, market, linkages, and production diversification. Common Facility Centres, Emporiums, Raw Material Banks, Trade Facilitation Centres, Common Production Centres, Design and Resource Centres will also be granted under the scheme.

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 those self-finances all its promotional activities.

Opportunities and Threats Opportunities

> Rising Demand for Sustainable and Handmade Products: Consumers are increasingly seeking environmentally friendly and ethically produced goods, presenting an opportunity for the handicraft industry to capitalize on its sustainable practices and handmade nature.

> 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 the business eco-system, stable macro-economic 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 the handicrafts sector.

Threats

> Global Competition: Different countries are positioning themselves in Handicraft export by increased and better technological support and advanced Research & Development facilities in the competing countries.

> Industry Structures: Competition from manufacturer exporter as well as private players who have a lean structure and flexible policies.

> Handicrafts may face pricing pressure due to cost factors such as materials, labor, and transportation, making it essential for artisans to strike a balance between affordability and maintaining fair compensation.

> 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.

> Despite the growth of e-commerce, some artisans may face challenges in reaching a wider customer base due to limited resources, lack of digital skills, or inadequate infrastructure.

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 internal financial control framework of the Company is commensurate with the size and operations of the business and is in line with the requirements of the regulations. We have laid down adequate procedures and policies to guide the operations of our business. Unit/functional heads are responsible for ensuring compliance with the policies and procedures laid down by the management. Our internal control systems are periodically tested by the Management, Statutory Auditors and Internal Auditors.

Internal Audit at the Company is an independent and objective activity designed to provide assurance to senior management and add value by identifying opportunities to deliver business benefits and improvements to internal controls. It helps us accomplish our objectives by bringing a systematic and disciplined approach to evaluating and improving the effectiveness of processes, controls, and governance.

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 2024.

Discussion on Financial performance with respect to operational performance

Revenue from operations increased to ?90.32 crore in FY 2024 compared to ?82.85 crore in FY 2023. A growth of 9.02% since last year. The Company was able to have significant growth in Revenue from operations in the market compared to its peers.

EBITDA increased to ?13.38 crore in FY 24 from ?10.42 crore in FY 23. A growth of 28.47% since last year.

Profit after tax increased to ?9.57 crore in FY 24 from ?7.12 crore in FY 23. A growth of 34.41% 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.

BORANADA STORE:

During the year, the Company launched its Fourth offline store named "Priti Home". This store is strategically located at Boranada, in the heart of the Blue City, Jodhpur, Rajasthan and is set to become a hub for businesses seeking high-quality, stylish, and functional furniture solutions. This Store is situated at Opp. Meera Sansthan, Boranada Main Road, Jodhpur, Rajasthan 342012.

The Company has a 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.

PriAuction.com

The Company has launched the New Auction Website "PriAuction.com", a cutting-edge online platform that seamlessly integrates exclusive furniture and timeless antiques. "PriAuction.com" is poised to redefine the way enthusiasts and collectors engage with premium furniture and antique pieces.

This launch marks a significant step forward for our Company, positioning us as a leader in the dynamic and evolving market of exclusive furniture and antiques and resulting into Indias first-ever vintage furniture e-auction site that we will use for auctioning period and rare pieces, original antiques, collectors items and reproduction of old pieces, among others.

Government and Corporates Procurement Tenders

The Company has also achieved a milestone by fulfilling various Corporates and Government Procurement tenders for Furniture including orders from CPWD (RASTRAPATI BHAWAN NEW DELHI), Department of Atomic Energy, Indian Navy, KENDRIYA VIDHYALAYA, BDL (Bharat Dynamics Limited), BEL (Bharat Electronics Limited), NTPC Limited and various other sectors. Also an order from CRPF Headquarters is in queue

Airport Furniture segment

The Company have taken a strategic step towards diversification and expansi?n by entering the lucrative Airport Furniture segment. The Airport Furniture segment has presented significant opportunities for growth, and we are well prepared to capitalize on these prospects. This year we have dig out various opportunities in Airport Furniture segment through Airport Authority of India like Begumpet Airport, Kolkata Airport and Vijayawada Airport making PRITI a brand with fulfilling their needs and emerging and establishing more and more in this sector.

Priti International Limited remains committed to expanding our product portfolio and market presence.

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 ?89.36 crore in FY 24 compared to ?82.06 crore in FY 23.

B) Textile Handicraft:

Revenue from operations increased to ?96.71 Lakhs in FY 24 compared to ?79.73 Lakhs in FY 23.

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 Human Resources (HR) function of an organization is vital to the creation and development of good quality and dedicated human capital, essential to the Companys business and operations. 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 acknowledges the employees contribution towards leading, thinking, working, creating, processing and dealing to enhanced growth.

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, 2024. 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 2024	% of Revenue	% Growth	FY 2023	% of Revenue
Revenue	90.32	100.00%	9.02%	82.85	100.00%
Earnings before interest, tax, depreciation, and amortization (before other income)	13.38	14.81	28.41%	10.42	12.58%
Profit Before Tax (PBT)	12.84	14.22	34.59%	9.54	11.51%
Profit after tax attributable to shareholders of the Company	9.57	10.60	34.41%	7.12	8.59%
Earnings per share (in Rs.)	7.89	-	21.38%	6.50	-

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-2024	31-Mar-2023
Ratios -Financial Performance
i. Operating Profit Margin	%	14.25	12.05
ii. Net Profit Margin	%	10.59	8.59
iii. Return on Net Worth	%	16.94	61.24
Ratios -Growth
i. Total Revenue	%	8.92	41.64
ii. EBITDA	%	28.44	64.01
iii. Profit After Tax	%	34.46	62.64
Ratios- Balance Sheet
i. Debtors Turnover	Times	6.85	8.2
ii. Inventory Turnover	Times	4.83	12.53
iii. Interest Coverage Ratio	Times	370.11	372.70
iv. Current Ratio	Times	4.75	3.96
v. Debt Equity Ratio	Times	N. A	N. A

Detailed Explanation on Change in 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.

	For & on Behalf of Board of Directors of PRITI INTERNATIONAL LIMITED
	Sd/-
Date: September 05, 2024	GOVERDHAN DAS LOHIYA
Place: Jodhpur	Chairman
	DIN:07787326