Radix Industries (India) Ltd Management Discussions.

Annexure-IV

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.

INDUSTRY STRUCTURE AND DEVELOPMENT:

ECONOMIC OVERVIEW

India continues to remain the fastest growing major economy in the world in 2018-19, despite a slight moderation in its GDP growth from 7.2 per cent in 2017-18 to 6.8 per cent in 2018-19. On the other hand, the world output growth declined from 3.8 per cent in 2017 to 3.6 per cent in 2018. The slowdown in the world economy and Emerging Market and Developing Economies (EMDEs) in 2018 followed the escalation of US China trade tensions, tighter credit policies in China, and financial tightening alongside the normalization of monetary policy in the larger advanced economies.

Indias growth of real GDP has been high with average growth of 7.5 per cent in the last 5 years (2014-15 onwards). The Indian economy grew at 6.8 per cent in 2018-19, thereby experiencing some moderation in growth when compared to the previous year. This moderation in growth momentum is mainly on account of lower growth in Agriculture & allied, Trade, hotel, transport, storage, communication and services related to broadcasting and Public administration &defence sectors. Acreage in 2018-19 for the rabi crop was marginally lower than last year, which affected agricultural performance. The contraction in food prices may have contributed to inducing farmers to produce less. On the demand side, lower growth of GDP in 2018-19 was accounted for, by a decline in growth of government final consumption, change in stocks and contraction in valuables.

(Source:http://pib.gov.in/newsite/PrintRelease.aspx?relid=191212)

GLOBAL INDUSTRY OVERVIEW

Wigs & Weaves provide hair versatility about the aesthetic and cultural needs. Allowing large pool of hairstyle options, wigs can also provide relief from hair breakage caused due to excessive hair styling. Wigs & hair pieces Industry mainly specializes in wigs, hair extensions and hairpieces for aesthetic and medical purposes. The products for wigs & hairpiece industry are mainly segmented into those made of human hair and those made of synthetic materials. These products are further sub-segmented as per broad range of other key differentiators including color, style, price, and durability.

Surging demand for beautification practices, rising demand from hair product and cosmetic industry, exploring fashions sense in entertainment sector such as films, theatre and television are major driving factors for the global Wig Market. Furthermore, rising population around the globe, modernized society, an adaption of high living standards, increasing disposable income and proving a better substitute for hair treatment surgeries propels the market growth further. Geographically, China, Indonesia, Hong Kong, U.S.A., and Italy are the most important market for the wigs industry. Asia Pacific is one of the most promising regional markets for the wigs industry.

OPERATIONS:

During the year under review, Company has made a revenue of Rs.1069.60 Lacs in the current financial year as compared to 1206.58Lacs for the previous financial year. Your Company has posted net profit after tax of Rs.124.60 Lacs in the current year as compared to Rs. 126.22 Lacs in the previous financial year.

FUTURE OUTLOOK:

The Company has started its operations in the new line of business in the FY 2012-13, after going through the process of restructuring and was able to make some good revenue year after year and in the FY 2018-19, due to slow down in the economy, there was slight decrease in the revenue from operations of the Company maintaining the profit intact.

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, Company has made a revenue of Rs.1069.60 Lacs in the current financial year as compared to 1206.58 Lacs for the previous financial year. Your Company has posted net profit after tax of Rs.124.60 Lacs in the current year as compared to Rs. 126.22 Lacs in the previous financial year.

RISK & CONCERNS : Earlier the industry experienced serious threat from synthetic hair. However, thesynthetic 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 2018-19 2017-18
Total Income 1069.60 1206.58
Total Expenses 896.23 1033.87
Profit Before Taxation 173.37 172.71
Profit after Tax 124.60 126.23
Earnings per Equity share - Basic & Diluted 1.25 1.26

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
Place: Tanuku Chairman & Managing Director
Date : 13.08.2019 (DIN: 00453895)

Details pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

i) The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2018-19, ratio of the remuneration of each Director to the median remuneration of the employees of the company for the financial year 2018-19

Sr. No. Name of Director/ KMP and Designation *Remuneration of Director KMP for the Financial year 2018-19 % increase in Remuneration in the Financial year 2018-19 ratio of the remuneration of each Director to the median remuneration of the employee
(in Lacs)
1 G. Raghu Rama Raju
(Managing Director) 1200000 NIL 7.60
2 P. Lenin Babu
(Company Secretary) 348000 7.4 NA
3 G. Rama Prabhakara Raju
(Chief Financial Officer) Nil NA NA

ii) The median remuneration of employees of the Company during the financial year:

The median remuneration of employees of the Company during the financial year was Rs- 1,57,800/ - p.a iii) The percentage increase in the median remuneration of employees in the financial year:

The percentage increase in the median remuneration of employees in the financial year ending March 31, 2019 was 31.5% iv) The number of permanent employees on the rolls of Company as at March 31, 2019:

There were 16 permanent employees on the rolls of Company as on 31st March, 2019. viii) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration: NA

There are no other employees drawing Rs 8.50 Lacs per month or Rs. 102.00 Lacs per annum, whether employed throughout the year or part of the Financial year.

There are no employees in the service of the Company covered under Rule 5 (2) (iii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 Company affirm that the remuneration is as per the remuneration policy of the Company

BY THE ORDER OF THE BOARD
For Radix Industries (India) Limited
Sd/-
G. Raghu Rama Raju
Place: Tanuku Chairman & Managing Director
Date : 13.08.2019 (DIN: 00453895)

Statement of Particulars of Employees Pursuant to Provisions of Rule 5(2) of Section 197(12) of the Companies Act 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Sl. No. Name of the Employee Designation Remune- ration (Per Annum) Nature of Employment (whether Contractor or otherwise Qualification & Experience Date of Commencement of Employment Age Last Employment of such Employee % of Equity Shares held of the EmployeeC Whether the employee is relative of any director / Manager, if yes name such Director and Manager
1. G. Raghu Rama Raju Managing Director 1200000 Regular MBA 29.12.2011 53 Arqube Industries (India) Ltd 61.62 Relative of Smt. G. Parvathi, Director
2. P. Lenin Babu CS 348000 Regular ACS 11.02.2016 48 Meenakshi Energy & Infrastructure Holdings Pvt. Ltd., 0 NA
3. V.Singa Raju Production Executive 297600 Regular Technical 01.07.2015 43 Arqube Industries Ltd. 0 NA
4. K. Phani Babu Tech Executive 240000 Regular Technical 01.04.2015 25 0 NA
5. T. Badri Narayana Accounts Officer 228000 Regular PGDAFMT 01.01.2018 38 Sri Venkataraya Threads Pvt Ltd 0 NA
6. Balaji Valluri Accounts Officer 246000 Regular M.Com 01.07.2015 38 Andhra Sugar Ltd., 0 NA
7. V. Rama Chandra Raju Asst. Production Executive 207600 Regular Technical 01.07.2015 38 Arqube Industries Ltd. 0 NA
8. V. Pradeep Raju Technical Asst. 162000 Regular Technical 01.04.2015 36 Arqube Industries Ltd. 0 NA
9. B. Venkata Seetha Ramaraju Production Asst. 120000 Regular Technical 01.04.2015 35 Arqube Industries Ltd. 0 NA
10. I. Naga Krishnam Raju Office Asst. 153600 Regular B.Com 01.04.2015 25 NIL 0 NA

 

BY THE ORDER OF THE BOARD
For Radix Industries (India) Limited
Sd/-
G. Raghu Rama Raju
Place: Tanuku Chairman & Managing Director
Date : 13.08.2019 (DIN: 00453895)