Ravi Leela Gran Management Discussions


[Pursuant to Regulation 34 read with Para B of Schedule V of SEBI (ListingObligations and Disclosures Requirements) Regulations, 2015]

The Management at Ravileela Granites Limited (Ravileela/ The Company) is pleased to present the Management Discussion and Analysis Report which provides an insight of the Companys business, Industry structure, developments, outlook, opportunities, concern areas and performance of the Company with respect to the operations and other relevant information. This Report forms part of the compliance report on Corporate Governance.

Business of the Company

Ravileela Granites was founded in 1990 with a simple idea that the world deserved nothing less than the best Granites that is available in the mines around the states of Telangana and Andhra Pradesh and over a period Company has gained recognition for its dedication to producing top-tier granite products. The Companys unwavering focus on quality control and adherence to international standards have set it apart in a competitive market. Its commitment to quality has resulted in a loyal customer base. Ravileela has grown significantly in terms of quality, volume, and diversity, constantly striving for the best. Its cutting-edge plant, located on Prakasam District, Andhra Pradesh, is capable of handling massive volumes.

Ravileela continues to select a wide and exotic bouquet of granites in a spectrum of combinations to go well with all combinations and interiors, and is capable of effortlessly producing superior quality granite keeping with its motto of nothing but excellence.

Ravileela Granites has consistently invested in cutting-edge technology and machinery to improve processing efficiency and enhance product offerings. This commitment to innovation has allowed the company to stay ahead in a rapidly evolving industry.

Company has recognized the global demand for high-quality granite and has expanded its operations beyond US to the European market establishing a strong presence in Central and Eastern Europe. This strategic move has solidified its position as a global player.

A. Economic Overview

• Global Economy:

There has been a decline in the growth of the overall global economy from 3.4 percent in 2022 to 2.8 percent in 2023, is expected to be around 3.0 percent in 2024. Advanced economies have seen an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. The year saw geopolitical uncertainty with the prolonged Russia- Ukraine conflict and economic challenges leading to disruptions in the global supply chain and elevated inflation with increase in commodity and energy prices. This prompted central banks to aggressively tighten their monetary policy, which further impacted economic activity.

• Indian Economy and Outlook

The World Bank now fears that the ongoing slump in global economic growth will likely result in a "lost decade." Despite this gloom, many market analysts believe that this could well be Indias decade. And there are enough reasons and data to back this claim. Recent data revisions by India suggest the economy has fared better than previously believed despite continuing global uncertainties. The International Monetary Fund (IMF) expects India to grow by 5.9% in FY 2023-24 and by an average rate of 6.1% over the next five years.

• Government Initiatives

A number of initiatives have been undertaken by the Government of India with the hope of incentivizing real estate purchases. The announcements made in the Union Budget 2022-2023 will help in creating a thriving atmosphere in the real estate sector. The government continues to prioritize the affordable housing segment and are looking at ways to strengthen the existing financing systems to provide liquidity to real estate projects.

B. Industry Structure and Development:

The expansion of the granite business is intimately linked to the countrys real estate market. During the year under review, Indias real estate sector is witnessing a healthy increase in demand in 2022-23 and this momentum is expected to hold for the rest of the year. From commercial spaces to the residential market, the overall market outlook is a bright one for the real estate industry.

Buoyed by these factors, the sector is likely to make a strong comeback. The industry is additionally to benefit from a regime of low interest rates, coupled with duty waivers (in some states), realistic property pricing and attractive offers leading to affordable synergy.

The rapid growth in real estate, combined with government efforts and a shift in consumer attitudes, has aided in increasing demand for granite.

• Granite Industry

Granite is one of the oldest and most sought-after stone in world. It was used in building monuments for thousands of years and now with the advent of technology for cutting and polishing, its use has further extended for decorative purposes. Granite due to its high compressive strength, longevity and beauty finds applications in building material and decorative purposes. Its usage in kitchen countertop, bathroom and stairs has significantly increased over the last few decades.

Globally granite industry is dominated by a few granite producing countries with huge granite reserves. Top granite producing countries are China, Brazil, India, Italy and Saudi Arabia. On the demand side USA is largest consumer of granite and its demand is largely satisfied by imports from Brazil, India, China and other countries. Europe is the other large market for granite and with limited reserves of its own meets its demand from imports.

India ranks second after China and comprised of 16% of global exports in 2020.

• Indian Granite Industry

India possesses a wide variety of natural stones including granite, marble, limestone, sandstone, slate and quartzite. It has more than 20% of the worlds granite reserves and they are spread across the country. India possesses large variety of over 200 shades, some of which are quite popular across world. Granite Industry plays a vital role in the economy of granite producing states like Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and Rajasthan. Indian granite industry generates huge employment in rural areas with the economic value pegged with it estimated at $ 40 billion.

Indian granite industry produces and exports vast variety of granite with high quality spread across many colors. India is one of the top exporters of granite stone globally.

• About the Company:

Ravileela Granites Limited is one of the well known granite exporter from India. The Company has been in granite exports business for more than 30 years. It exports to more than 5 countries across the world and has a plant located in Prakasam District, Andhra Pradesh. Company has received numerous awards and recognitions for its exports certification from Ministry of Commerce and Industry

Company has built a wide product portfolio of stones over the years. It processes granite blocks into slabs and cut-to-size tiles for large construction projects. It has installed capacity of 250000 square meters for granite slabs in Prakasam Plant.

• Business Practices:

Quality Assurance: The industry has made substantial investments in modern machinery and technology e.g. Multi wire to improve the quality of granite products, ensuring compliance with international standards.

Our latest plant in Ongole has state of the art machinery to ensure we produce the best quality granite with all the latest finishes and textures catered to the export market in US and Europe including cut to size projects.

Sustainable Quarrying: Environmental concerns have led to improved quarrying practices, with an emphasis on minimizing the ecological impact and adhering to government regulations.

This has also led to challenges in procuring quality material.

Our company is able to overcome this due to our long standing relationships with quarry owners.

• Market Diversification: We have diversified our product portfolios to include a wider range of granite varieties, catering to diverse customer preferences and global markets. Post Covid we have invested extensively in International marketing and sales and also participated in Global Trade fairs promoting our granite products.

• Management Philosophy

Ravileelas management philosophy revolves around three core principles:

Quality Assurance: The Company places paramount importance on delivering granite products that meet or exceed customer expectations. Rigorous quality control processes are embedded throughout the production chain.

Sustainability: Company is committed to sustainable quarrying and processing practices. It actively participates in eco-friendly initiatives to minimize its environmental footprint.

Customer-Centric Approach: Customer satisfaction is at the heart of the companys operations. It maintains transparent communication with clients, offers customized solutions, and ensures timely deliveries.

• Future Outlook

As Ravileela Granites enters its fourth decade in the industry, it remains poised for continued success. The company anticipates further expansion into emerging markets, an increased focus on sustainable practices, and the introduction of innovative product lines to cater to evolving customer needs.

Ravileela Granites journey as a premium processor of granite for three decades exemplifies its commitment to quality, sustainability, and customer satisfaction. It stands as a testament to the companys enduring legacy in the Indian granite industry.

The Indian granite industry continues to evolve, adapting to market dynamics and sustainability imperatives. With prudent management practices, a focus on quality, and exploration of new opportunities, the industry is well-positioned to maintain its leadership in the global granite market.

Performance during the year:

During the financial year ended as on 31st March 2023, the Company recorded total income of Rs. 3114 lakhs which was marginally lower as against the previous financial year, i.e., Rs. 3605 lakhs and has incurred Net loss of Rs. 164. lakhs as against previous financial year net profit of Rs. 159.94 lakhs.

FY 2023 started on a good note for the company. However, the company had to face challenges due to increase in freight charges. The performance of the company was further impacted due to shortage of shipping containers. Non- availability of empty containers disrupted the supply chain across the world and impacted global trade over extended period of time.

Currency Appreciation:

Company generated more than 95% of its revenue in FY 2023 from exports and currency fluctuations can impact the competitiveness and demand for Indian currency. The relative currency appreciation of Indian Rupee vis-a-vis competing nations like Brazil has impacted the business ngatively in the past.

The Company currently exports to over 5 countries. This helps in diversification of risks and any adverse currency movement in one country will have a lower impact on companys business. Some shades are only found in India and their demand is relatively inelastic and is not impacted by the currency movements. The Company is focused on exporting such colors and is also aiming to increase its sales in the domestic market.

Opportunities and Threats:

Ravileela Granites has established itself as a prominent player in the International granite industry, boasting an impressive three-decade ++ track record of excellence in processing and delivering premium granite products. Over the years, the company has consistently upheld its commitment to quality, innovation, and sustainability, earning a commendable reputation both domestically and on the global stage. Opportunities include the following:

• Export Potential: The global demand for granite products remains robust, presenting an opportunity for expansion into new international markets.

• Value Addition: Investing in downstream processes like granite fabrication and cut to size production will enhance our profitability.

• Sustainability Initiatives: Embracing sustainable practices can improve brand image and access environmentally conscious markets is what we endeavor to accomplish at Ravileela.

Some of the threats are as follows:

• Market Fluctuations: The industry is exposed to global market fluctuations, affecting both demand and prices. Forex fluctuations are a major concern.

• Environmental Compliance: Stricter environmental regulations have led to compliance challenges and increased operational costs of quarries thus resulting in higher raw material costs.

• Competitive Global Landscape: Competition from other granite- producing nations necessitates continuous innovation and cost- efficiency.

Risks and Risk Management:

Risks are an inherent part of business which cannot be avoided but its robust identification and management can overcome its effects.

The Company derives most of its revenue from international market. The competitive landscape, lack of manpower, technologies up-gradation in the peer group and non-availability of working capital may adversely affect the business operations. The Company is ensuring to mitigate these risks through proper planning and management of resources.

Change in Consumer Preference as the Stone industry is very dynamic designs and colors preference keep changing. Demand for products, colors and shades depend upon the trend in industry. The demand for engineered stone has increased at the expense of natural stones, which includes granite.

The Company has in place a designated Risk Management policy which is designed to overcome adverse industry fluctuations to successfully flourish the business at a reputable pace. The Company provides updates on risk management to the Audit Committee of the Board of Directors of the Company on a regular basis.

A comprehensive and integrated risk management framework forms the basis of all the de-risking efforts of the Company. Formal reporting and control mechanisms ensure timely information availability and facilitate vigilant and in-time risk management.

The Company thereby follows well-established and detailed risk assessment and minimisation procedures, which are periodically reviewed by the Board.

The Company has laid down a well-defined risk management mechanism covering risk mapping, risk exposure and risk mitigation process.

The decades of experience in this industry is helping it to sustain even extremely challenging situations

Segment Wise Performance:

As the Company is dealing in only one product, the same is not applicable.

Internal Control systems & adequacy:

We have devised comprehensive internal control systems, commensurate with the size and nature of the business and industry in which we operate, by instituting a comprehensive documentation system for all our operational and financial functions. The internal control systems are built in compliance with applicable laws and statutes. The systems ensure adequate safeguard of assets and efficient productivity at all levels. The control systems are crucial for securing sensitive data, easing the audit process, maintaining proper accounting records, reliable financial reporting, monitoring operations, conservation of assets, preventing frauds and errors, executing authorized transactions, safeguarding assets from unauthorized use and ensuring compliance with corporate policies.

Our internal audit team periodically reviews the adequacy of the internal control framework, and ensures it abides by all applicable rules and regulations. Any deviations or observations thus encountered are discussed with the Management and the Audit Committee. We keep a close eye on the internal control systems through periodic audits by the internal audit team. Any recommended measures and suggestions for improvement are duly considered. We can ensure robustness of our internal control systems as majority of the branches are electronically integrated with the Head Office. This ensures strict business compliance in accordance with applicable laws and statutes.

Outlook:

The Company has shown growth in sales and profit in spite of very challenging business conditions. Company is cautiously positive for better results in the coming year not withstanding issue with world-wide supply chain issue presently marring our operations.

Significant changes in the Key financial ratios, Net worth and other parameters:

Ratios
Particulars 2022-23 2021-22
Key Profitability Ratios
Operation Profit Margin
Net Profit Ratio -0.06 0.05
PAT / Networth (ROE) -0.10 0.09
Key capital structure ratios
Net Debt / Equity 3.35 3.08
Current Ratio 1.38 1.29
Debt service Coverage Ratio 0.21 0.26
Debtors Turnover Ratio 3.55 3.31
Stock Turnover Ratio 3.36 2.49

Information Technology

All aspects of Companys business, including production, market research, product development and distribution network, are highly automated for higher operational efficiency, better productivity and cost-effectiveness. It uses technically advanced programs to eliminate redundancies, and improve operational efficiencies and productivity. Automation of operations enables employees across the organizational framework to work more efficiently.

Quality Culture

Our constant efforts to offer superior quality, technologically driven and innovative products enable us to develop and nourish deep customer relationships. With unwavering focus on innovation, brand equity, technology adoption, quality adherence to international standards and investment in R&D, we relentlessly strive to improve the loyalty of both institutional and retail customers. This enables us to gain large scale acceptance in both Indian and overseas markets.

Human Resources

We believe that human capital plays a crucial role in business growth. Our skilled and dedicated employee base has enabled us to sustain and grow. Our HR policies are employee-friendly, nurturing a safe, conducive and productive work environment. This not only enables sustainable business growth but also, employee satisfaction and motivation.

Cautionary Statement:

Statements made in the Management Discussion and Analysis section describe the Companys objectives, projections, expectations and estimations, which may be forward-looking in nature. These statements are made within the meaning of applicable securities laws and regulations. Past performance of the Company is not necessarily indicative of its future results, and actual results could differ materially from those expressed and implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/supply and price conditions, variation in prices of raw materials, changes in Government regulations, tax regimes, economic developments and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements based on any subsequent development, information or events.

For and on behalf of the Board of Ravileela Granites Limited
Sd/- Sd/-
Parvatha Samantha Reddy Parvat Srivinas Reddy
Whole-time Director and cFo Director
DIN: 00141961 DIN:00359139
Address: H. No. 7-1-214/12 Address: H. No. 7-1-214/12
Ameerpet Begumpet, Ameerpet Begumpet,
Place: Hyderabad Secunderabad-500016, Secunderabad-500016,
Date: 14th August 2023 Telangana, India Telangana, India