Retina Paints Ltd Management Discussions

REPORT INDIAN

ECONOMY OVERVIEW

Throughout the fiscal year 2023-24, the world found itself ensnared in the relentless grip of conflict, with Europe and the Middle East serving as the epicenters of turmoil. The protracted war in Europe persisted unabated, casting a long shadow of uncertainty over the continent and beyond. Simultaneously, the Middle East remained embroiled in a quagmire of conflict, its ramifications echoing across geopolitical fault lines. The confluence of these crises sent shockwaves through global supply chain networks, disrupting the flow of goods and services on an unprecedented scale. As trade routes became increasingly precarious, market participants grappled with heightened levels of volatility in both financial and commodity markets. The intricate interplay of geopolitical tensions and economic instability created a climate of profound uncertainty, where the slightest geopolitical tremor could send reverberations rippling through the global economy. Despite the formidable challenges posed by the global landscape throughout the fiscal year, India distinguished itself as the fastest-growing major economy, forging ahead on the strength of a robust surge in capital formation. This momentum was propelled by a concerted effort in bolstering public investment, which served as the cornerstone of Indias economic expansion. Furthermore, the nations vast domestic consumption base played a pivotal role in sustaining this growth trajectory, although there were discernible signs of moderation compared to previous years. Spearheaded by the government, strategic reforms were implemented to fortify Indias economic resilience and foster self-reliance. Substantial investments were directed towards enhancing both physical and digital infrastructure, laying the groundwork for sustainable growth in the long term. Initiatives such as Make in India and the Production-Linked Incentive (PLI) scheme served as catalysts, galvanizing the manufacturing sector and nurturing indigenous industries. This multifaceted approach not only bolstered Indias economic growth but also reinforced its ability to weather external uncertainties, positioning the nation as a beacon of stability and progress amidst global turbulence. The National Statistical Office (NSO) projected a real GDP growth of 7.6% for FY 2023-24. This growth was buoyed by a robust expansion across industrial sectors, notably manufacturing, with the financial services sector playing a crucial role in driving economic momentum.

Inflation fell to a four-month low of 4.9% in the third quarter of FY 2023-24, thanks to the Reserve Bank of Indias balanced approach, managing inflation while stimulating growth. This development is perceived to have fostered a stable interest rate environment, providing an ideal backdrop for encouraging long-term investments and expenditure. With inflation under control and growth prospects looking promising, investors and consumers alike are likely to feel more confident in committing to ventures and purchases that have the potential to yield returns over an extended period.

INDUSTRY STRUCTURE AND DEVELOPMENTS PAINT INDUSTRY

One of the most prominent trends in the Indian paints industry is the growing awareness and demand for sustainable and eco-friendly products that minimize the environmental impact and enhance the indoor air quality. Customers are increasingly looking for paints that have low or zero volatile organic compounds (VOCs), which are harmful chemicals that evaporate from paints and cause health problems such as headaches, nausea, and respiratory irritation. According to the European Commission, paints and coatings can contribute up to 27% of the points needed to achieve LEED (Leadership in Energy and Environmental Design) certification, which is a globally recognized standard for green buildings. To meet this demand, paint manufacturers are developing products that use water-based or bio-based formulations, natural pigments, renewable raw materials, and recycled packaging. The paint industry is seeing a growing demand for durable, high-performance products that provide long-lasting protection and aesthetics, particularly in architectural coatings for various buildings. Customers seek paints that resist harsh weather, wear, stains, and corrosion. The global architectural coatings market, valued at $71.9 billion in 2020, is expected to grow at a 4.9% CAGR through 2028. To meet this demand, manufacturers are using advanced technologies like nanotechnology and smart coatings. Retina Paints offers products such as Retina Eco Damp, Retina Eco Advanced, Retina Weather Expert, and Retina Expo Ultimax to cater to this trend.

OPPORTUNITIES MARKET EXPANSION

The increasing trend towards eco-friendly paints represents a pivotal shift in the market landscape, unraveling fresh avenues of growth by embracing previously untapped market segments and fostering connections with a broader spectrum of environmentally-conscious consumers.

INNOVATION POTENTIAL

Creating sustainable paint products necessitates a rigorous process of research and development, serving as a crucible for innovation that ignites transformative advancements within the industry.

COMPETITIVE ADVANTAGE

Integrating sustainability into ethos and practices can distinguish us from competitors by weaving environmental stewardship and social responsibility into the very fabric of our operations, thus crafting a distinct identity that garners admiration and loyalty from conscientious consumers, ultimately solidifying a formidable foothold of advantage in the fiercely competitive market landscape.

CHALLENGES

INTENSE PRICE COMPETITION

The paint industry faces fierce price competition as numerous players offer similar products, leading to price wars and reduced profit margins.

CHANGING CONSUMER PREFERENCES

As consumer consciousness regarding environmental impact ascends, the call for eco-friendly and sustainable paints amplifies, compelling companies to redirect resources into extensive research and development endeavors. This imperative arises from the necessity to adapt to shifting consumer preferences, underscoring the pivotal role of innovation in meeting the evolving demands of the market.

RAW MATERIAL COST FLUCTUATIONS

The volatility inherent in the prices of raw materials integral to paint manufacturing poses a substantial threat to profitability, rendering it difficult for companies to uphold consistent pricing strategies. This unpredictability necessitates vigilant monitoring and agile adaptation to market dynamics, as companies strive to navigate the intricate balance between cost management and competitive pricing in a fluctuating economic landscape.

SEGMENT WISE PERFORMANCE

At present, the Company is engaged only in manufacturing and selling of paints and there is no other separate reportable segment.

a) Revenue from operations increased to Rs. 1,16,564.43 thousands as against Rs. 1,09,446.11 thousands in the previous year a growth of 6.50%. b) Profit After Tax (PAT) of the Company stood at Rs. 7,423.74 thousands as against Rs. 3,007.08 thousands for the previous year registering a growth of 146.88% in PAT.

OUTLOOK

The Company has embarked on a transformative journey, redefining its business model through the strategic integration of Franchisee outlets and its own Retail Outlets. Initiating this shift, the company celebrated the inauguration of its first Franchisee Outlet in Peerzadi Guda, Hyderabad, on the 29^th of February, 2024. As on the date of this report, the company operates a total of Six Franchisee Outlets, strategically positioned in Peerzadi Guda, Warangal, Thorrur, Medipally, Khammam and Palakurthy. Concurrently, the company unveiled its inaugural Retail Outlet in Khammam, Telangana, on the 29^th of January, 2024, marking a significant milestone. Leveraging this innovative business model, the Company ensures the availability of its diverse product range to a wider audience, eliciting enthusiastic responses from customers and driving robust daily sales figures. As on the date of this report, the company operates a total of Two Own Outlets, strategically positioned in Khammam and Cherlapally.

RISK AND CONCERNS

Risk management plays a crucial role in corporate governance and strategy development. We recognize that risk assessment and mitigation are ongoing processes that must adapt to the evolving risk landscape, encompassing short-term, medium-term, and long-term challenges. We believe that implementing systematic risk management practices is essential for effectively navigating towards our business objectives and ensuring sustainable growth in a volatile and complex environment. These risks continually evolve and change, both in terms of their impact and the likelihood of their occurrence. We understand the importance of operating within the dynamics of the paints and coatings industry and taking calculated risks to maintain our relevance in the market. Our responsible management teams and functional experts identify risks, followed by the formulation of appropriate mitigating actions.

Through our risk management framework, we strive to provide reasonable assurance that our business objectives can be achieved, and our obligations to various stakeholders can be fulfilled. The Board oversees the implementation of risk mitigation measures for key risks, as identified by the Audit Committee, which meets at least four times year.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established internal control systems that are appropriate for the nature of its business, as well as the scale and complexity of its operations. These systems include well-defined policies and procedures designed to ensure the effectiveness and efficiency of its operations, reliability of financial reporting, compliance with applicable laws and regulations, prevention and detection of fraud and errors, and safeguarding of assets. Regular examinations by internal auditors will be conducted to assess the adequacy and effectiveness of these internal controls, following a risk-based audit strategy. The internal audit plan is reviewed and approved by the Audit Committee, which also evaluates the sufficiency and effectiveness of the Companys internal financial controls and monitors the implementation of audit recommendations. The Audit Committee is kept informed of significant audit findings and activities, and appropriate corrective measures are undertaken accordingly.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

The Company relies heavily on its human resources to propel its operations, accomplish its objectives, and sustain its competitive advantage. It is committed to establishing a robust leadership succession plan while concurrently cultivating a secure, inclusive, and diverse workforce. Several training initiatives are regularly implemented to consistently engage with employees. The all-encompassing culture plays a pivotal role in fostering high performance among individuals and cultivating a sustainable business environment. Employees are the pillars of your Company and a major resource for the future. Its their inexorable commitment that helps your Company to create spaces that enhance quality of life. Keeping the spirits high at the workplace needs sound mental and physical fitness and a deep-rooted culture that promotes work-life balance.

Your Companys focus is to continue building organizational capability and capacity, leverage and nurture key talent, encourage meritocracy and enhance people utilization aligned with the business strategy. As of March 31, 2024, your Company had 55 employees.

KEY FINANCIAL RATIOS

Particulars	Unit of Measure ment	31.03.2024	31.03.2023	Variation in %
Current Ratio	Times	2.35	1.93	21.43%
Debt-Equity Ratio	Times	0.29	0.17	69.59%
Debt Service Coverage Ratio	Times	0.24	0.27	5.77%
Return on Equity Ratio	In %	4.29	4.05	6.05%
Inventory Turnover Ratio	Times	3.24	3.08	2.49%
Trade receivables Turnover Ratio	Times	2.23	2.79	-22.22%
Trade payables Turnover Ratio	Times	2.89	2.72	23.75%
Net Capital Turnover Ratio	Times	1.32	2.18	-40.96%
Net Profit Ratio	In %	4.29	2.75	60.25%
Return on Capital Employed	In %	0.06	0.05	25.64%
Return on Networth	In %	0.03	0.02	50.00%
Return on Investment (Assets)	In %	-	-	-

Reason for variation in ratios of more than 25% change is mainly due to increase in the shareholders funds due to issue of equity shares with premium during the year and collection of franchise fee.

DISCLOSURE OF ACCOUNTING TREATMENT

In the preparation of the financial statements for the year ended 31^st March 2024, the applicable Accounting Standards ("AS") have been followed.

	On behalf of the Board of Directors
	Sd/-	Sd/-
	Rakesh Dommati	Rajitha Koyyda
Place: Hyderabad	Managing Director	Whole Time Director
Date: 05.09.2024	DIN: 03214046	DIN: 07108068