B. MANAGEMENT DISCUSSION & ANALYSIS
OVERVIEW:
The financial statements have been prepared in compliance with the
requirements of the Companies Act, 2013, guidelines issued by the Securities and Exchange
Board of India (SEBI) and other statutory requirements. Our Management accepts
responsibility for the integrity and objectivity of these financial statements, as well as
for various estimates and judgments used therein. The estimates and judgments relating to
the financial statements have been made on a prudent and reasonable basis, so that the
financial statements reflect in a true and fair manner the form and substance of
transactions and reasonably present our state of affairs, profits and cash flows for the
year.
ECONOMIC OVERVIEW
World Economy: According to the IMF report, global growth is projected
to fall from an estimated 3.5% in 2022 to 3% in both 2023 and 2024.
The IMF on July 25 projected a growth rate of 6.1% for India in 2023,
which is a 0.2 percentage point upward revision compared with the April projection.
"Growth in India is projected at 6.1% in 2023, a 0.2 percentage
point upward revision compared with the April projection," it said in its latest
update of the World Economic Outlook.
While the forecast for 2023 is modestly higher than predicted in the
April 2023 World Economic Outlook (WEO), it remains weak by historical standards.
The rise in central bank policy rates to fight inflation continues to
weigh on economic activity. Global headline inflation is expected to fall from 8.7% in
2022 to 6.8% in 2023 and 5.2% in 2024, it said.
Underlying (core) inflation is projected to decline more gradually, and
forecasts for inflation in 2024 have been revised upward, it said.
The IMF said the recent resolution of the U.S. debt ceiling standoff
and, earlier this year, strong action by authorities to contain turbulence in the U.S. and
Swiss banking, reduced the immediate risks of financial sector turmoil.
This moderated adverse risks to the outlook, it said.
However, the balance of risks to global growth remains tilted to the
downside.
Inflation could remain high and even rise if further shocks occur,
including those from an intensification of the war in Ukraine and extreme weather-related
events, triggering more restrictive monetary policy, the report said.
Financial sector turbulence could resume as markets adjust to further
policy tightening by central banks. Chinas recovery could slow, in part as a result
of unresolved real estate problems, with negative cross-border spillovers, it said.
"Sovereign debt distress could spread to a wider group of
economies. On the upside, inflation could fall faster than expected, reducing the need for
tight monetary policy, and domestic demand could again prove more resilient," said
the WEO report.
The IMF said central banks in economies with elevated and persistent
core inflation should continue to clearly signal their commitment to reducing inflation.
A restrictive stance - with real rates above neutral - is needed until
there are clear signs that underlying inflation is cooling.
"With fiscal deficits and government debt above pre-pandemic
levels, credible medium-term fiscal consolidation is in many cases needed to restore
budgetary room for manoeuvre and ensure debt sustainability," the IMF said.
Source: IMF projects Indian economy to grow at 6.1% in 2023 - The Hindu
GLOBAL INDUSTRY OVERVIEW
Global real GDP is forecasted to grow by 2.7 percent in 2023, down from
3.3 percent in 2022. We expect further slowing to 2.4 percent in 2024. Economic growth is
moderating under the weight of still high inflation and monetary policy tightening. Rather
than a global recession, we expect a relatively subdued economic outlook. Growth is
generally strongest in emerging Asian economies, and weakest in Europe and the US.
Rapid monetary policy tightening over the last year or so led to
weakening in global housing, bank lending, and the industrial sector. However, this
weakness has been more than offset by strength in other sectors, most notably
service-sector activities, which is visible in labor markets. Strong consumer spending and
the fading impact of shocks of recent years have been difficult to assess, leading to
ongoing forecast revisions. Nonetheless, recent data point to moderation of these positive
trends, leading to slower global growth in the second half of 2023 and early 2024.
Two key risks stand out regarding the global economic outlook. The
first relates to inflation. While headline inflation has peaked in most economies, core
inflation (excluding volatile items such as food and energy) has proven stickier and has
not decisively peaked in many economies. Price pressures in the (global) goods and
industrial sectors have receded, and if history is any guide, services prices should
likewise moderate over the next quarters. However, the speed of this disinflationary
process is hard to assess and will depend on a number of factors including weakening
demand and pricing power of firms, labor market dynamics, and pass through from past input
price increases. The second risk relates to financial market stability. Central banks
tightened monetary policy rapidly and this exposed weakness in the banking sector, and
financial markets in general. While most indicators point to relative stability in global
financial markets, long and variable lags in the pass through of monetary policy mean more
financial turmoil could be on the horizon.
Apart from country-specific deviations, such as a possible rebound in
US GDP in 2025, business would do well to prepare for a slowing global economic growth
environment over the next decade. Relatively slow growth of about 2.5 percent for
2023-2024 for the global economy reflects the ongoing pivot to a more modest global GDP
growth environment for the next decade, which is estimated at around 2.6 percent, down
from an average annual pace of 3.3 percent in the decade leading up to the pandemic.
The 10-year economic outlook signals a prolonged period of disruptions
and uncertainties for businesses, but there are also opportunities. Global growth will
return to its slowing trajectory with mature markets making smaller contributions to
global GDP over the next decade. Nonetheless, there are still opportunities for firms to
invest in both mature markets - given their wealth and need for innovation to compensate
for shrinking labor forces - and emerging markets - given their need for both physical and
digital infrastructures to support their sizable and young labor forces. Keys to ensuring
growth over the longer term include developing new lines of business; strengthening
corporate culture; embracing digital transformation and automation; recruiting for talent
with new skills not currently represented in the company; and maximizing the hybrid work
model where it makes sense.
Source: Global Forecast Update (conference-board.org)
OPERATIONS:
In the Financial Year 2022-23, your Company has made a revenue of Rs
2626.61 Lacs in the current financial year as compared to Rs. 2541.82 Lacs for the
previous financial year. Your Company has posted net profit after tax of Rs. 152.87 Lacs
in the current year as compared to Rs. 150.77 Lacs in the previous financial year.. Your
Directors are confident of increasing the top line to achieve sustainable growth in the
business of the Company
FUTURE OUTLOOK:
The human hair wigs and extensions segment will gain considerable
market share in the hair wigs and extensions market. When compared to synthetic hair wigs
and extensions, human hair wigs and extensions are extremely popular due to their likeness
to genuine hair and superior product quality and longevity. Raw materials for human hair
wigs and extensions are primarily supplied by China and India.
Furthermore, hair from donors in these countries rural areas is
in high demand because the hair is of good quality and has not been exposed to harsh
chemicals or colours. During the projection period, this rising need will propel the
segment forward. Management is actively considering to explore new markets and to bag big
orders in the overseas market.
OPPORTUNITIES & THREATS
Strength: Huge demand for Hair produced in India in foreign countries,
providing high export potential.
Weakness: To get the Hairs for the manufacturing of wigs whenever
required is not possible. So it needs to be purchased in bulk quantity whenever it is
available, requiring heavy capital investments in stocks.
Opportunities: Asian hair grows the fastest and has the greatest
elasticity, making it the most preferred wigs around the world. There is huge demand for
human hair and Articles of human hair in China, Brazil, Spain, Korea, U.K, Hong Kong,
Indonesia, Italy, Austria, Germany etc.
Threats: Earlier the industry experienced serious threat from synthetic
hair. However, the synthetic hair had not found favor with the consumers, as it is said to
have caused allergic problems and cancer. Other perceived threats are Un Organized Sector,
largely dependent on overseas market and normal market competition.
SEGMENT WISE / PRODUCT WISE PERFORMANCE:
HAIR PRODUCT: During the year under review, your Company has made a
revenue of Rs 2626.61 Lacs in the current financial year as compared to Rs. 2541.82 Lacs
for the previous financial year. Your Company has posted net profit after tax of Rs.
152.87 Lacs in the current year as compared to Rs. 150.77 Lacs in the previous financial
year
RISK & CONCERNS: Earlier the industry experienced serious threat
from synthetic hair. However, the synthetic hair had not found favor with the consumers,
as it is said to have caused allergic problems and cancer. Other perceived threats are Un
Organized Sector, largely dependent on overseas market and normal market competition.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The philosophy we have with regard to internal control systems and
their adequacy has been formulation of effective systems and their strict implementation
to ensure that assets and interests of the Company are safeguarded; checks and balances
are in place to determine the accuracy and reliability of accounting data. The Company has
a well-defined organization structure with clear functional authority, limits for approval
of all transactions. The Company has a strong reporting system, which evaluates and
forewarns the management on issues related to compliance. Company updates its internal
control system from time to time, enabling it to monitor employee adherence to internal
procedures and external regulatory guidelines.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERARTIONAL PERFORMACE:
The highlights of overall performance are as follows
(Rs in Lacs)
| Particulars |
2022-23 |
2021-22 |
| Total Income |
2626.92 |
2541.82 |
| Total Expenses |
2422.42 |
2338.63 |
| Profit Before Taxation |
204.50 |
203.19 |
| Profit after Tax |
152.87 |
150.77 |
| Earnings per Equity share - Basic & Diluted |
1.02 |
1 |
KEY FINANCIAL RATIOS:
| Sl. No |
Particulars |
2022-23 |
2021-22 |
% change |
| 1 |
Debtors Turnover (days) |
19 |
31 |
(38.81) |
| 2 |
Inventory Turnover (days) |
277 |
313 |
(11.46) |
| 3 |
Interest Coverage Ratio (times) |
8.33 |
6.30 |
32.27 |
| 4 |
Current Ratio |
10.53 |
3.83 |
174.91 |
| 5 |
PBT to Net Sales (%) |
7.79 |
7.99 |
(0.21) |
| 6 |
PAT to Net Sales (%) |
5.82 |
5.93 |
(0.11) |
| 7 |
Return on Net Worth (%) |
8.38 |
8.28 |
0.10 |
| 8 |
Debt Equity Ratio (times) |
0.14 |
0.49 |
(38.81) |
Reasons for change more than 25% in Key Ratios:
# Earnings for Debt Service = Net Profit before taxes + Non-cash
operating expenses like depreciation and other amortizations + Interest + other
adjustments like loss on sale of Fixed assets etc.
Note:
1) Due to improvement in operating cycle of the company and
liquidity current assets ratio, Debt to equity ratio, Debt service coverage ratio,
Inventory and Trade receivables ratios, return on capital employed ratios are improved
when compared to previous year.
PERSONNEL:
Human wealth is the ultimate wealth in for any industry. The Company
recognizes this fact and understands that employees are one of the most important sources
for sustained growth of any business. Quality personnel delivering their optimum potential
for the organization is the key differentiator. The Company maintained good relations with
its employees and there was no unrest in the Company at any point of time.
Industrial relations in the organization continued to be cordial and
progressive.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT
INCLUDING NUMBER OF PEOPLE EMPLOYED:
There were no material developments in the human resources of the
Company and in the number of people employed in the Company
HEALTH AND SAFETY:
The Company places considerable emphasis on health and safety
throughout its operation and displays commitment to ensure the high standards being
maintained in compliance with applicable laws and regulations.
FORWARD LOOKING / CAUTIONARY STATEMENT:
Certain statements in the Management Discussion & Analysis Report
detailing the Companys objectives, projections, estimates, expectations or predictions
may be forward looking statements within the meaning of applicable securities laws and
regulations. These statements being based on certain assumptions and expectation of future
event; actual results could differ materially from those expressed or implied. Important
factors that could make a difference to the Companys operations include economic
conditions affecting domestic demand supply conditions, finish goods prices, changes in
Government Regulations and Tax regime etc. The Company assumes no responsibility to
publically amend, modify or revise any forward-looking statements on the basis of
subsequent developments, information or events.
BY THE ORDER OF THE BOARD For Radix Industries (India) Limited
|
Sd/- |
|
G. Raghu Rama Raju |
|
Chairman & Managing Director |
|
(DIN: 00453895) |
| Place: Tanuku |
|
| Date : 25.07.2023 |
|
+91-9892691696
