Rockingdeals Circular Economy Ltd Management Discussions

The management of Rockingdeals Circular Economy Limited is pleased to present its analysis report on the performance and future outlook of your company.

Global Economics Review

The baseline forecast is for the world economy to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies—where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025—will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. The forecast for global growth five years from now—at 3.1 percent—is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually.

The global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability. Changes in mortgage and housing markets over the prepandemic decade of low interest rates moderated the near-term impact of policy rate hikes, focus is on medium-term prospects and shows that the lower predicted growth in output per person stems, notably, from persistent structural frictions preventing capital and labor from moving to productive firms. It further indicates how dimmer prospects for growth in China and other large emerging market economies will weigh on trading partners.

(Source: Global Economic Outlook, IMF)

Indian Economy

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. Indias nominal gross domestic product (GDP) at current prices is estimated to be at Rs. Rs173.82 lakh crore in FY2023-24, which is an 8.2% increase from 2022-2023. This is higher than the 7% growth rate in 2022-2023, and is attributed to a 7.8% expansion in the fourth quarter of 2023-2024. Indias nominal GDP (GDP at current prices) is estimated to be Rs295.36 lakh crore in 2023-2024, which is a 9.6% increase from 2022-2023.

India is the third-largest unicorn base in the world with over 83 unicorns collectively valued at US$ 277.77 billion, as per the Economic Survey.

India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to a shift in consumer behaviour and expenditure pattern, according to a Boston Consulting Group (BCG) report. It is estimated to surpass the USA to become the second-largest economy in terms of purchasing power parity (PPP) by 2040 as per a report by Price Water house Coopers.

INDUSTRY STRUCTURE AND DEVELOPMENT Re-commerce

Indias Recommerce Sector, the practice of selling previously owned products, is thriving due to a blend of environmental technological, and socio-economic factors. People are more environmentally conscious now, as seen in initiatives like Patagonias Worn Wear program, where used ilems are traded, refurbished, and resold, aligning with the broader sustainability trend. The circular economy is gaining traclion. Consumer attitudes are shifting too, especially among younger generations who favor thrift shopping and vintage finds, reflecting a preference for sustainable and unique choices. Economically, recommerce offers budget-friendly options.

Brands are also engaging in recommerce to maintain customer loyalty; Apples Certified Refurbished program is a prime example. Regulatory efforts, particularly in the EU, are pushing companies towards sustainable practices. The scope of recommerce is expanding, as seen in REIs inclusion of diverse outdoor gear.

All these factors combine to make recommerce a thriving sector, driven by a collective move towards more sustainable, affordable, and technologically facilitated consumer practices.

The global reconunerce market is projected to reach a staggering $355 billion by 2025, representing a 21% annual growth. Millennials and Gen Z are the leading forces, with 64% of Gen Z preferring to buy preowned clothing. Online platforms are facilitating this growth, boasting millions of active users.

The recommerce market is poised for continued exponential growth, driven by rising consumer awareness, technological advancements, and innovative business models.

Opportunities.

• As the middle class grows and internet penetration increases, re-commerce platforms can expand into emerging markets like India. Consumers are looking for more affordable alternatives to new products.

• Re-commerce can create jobs in areas like marketing, customer service, logistics, and technical inspection. The skill sets needed for these roles may combine elements from retail and e-commerce.

• Re-commerce can help businesses save resources, reduce environmental impact, and lower production costs. For example, second-hand clothing sales are growing three times faster than new clothing sales, which can contribute to sustainability and circularity

• Technology has helped formalize the re-commerce industry, making it more mainstream. For example, technology can improve search using AI, enable reverse logistics for used products, and increase product visibility with augmented reality and virtual reality.

Threats & challenges

• Pricing recommerce goods can be tricky, often lead ing to thin profit margins. Without a standardized manufacturing process, determining an items market value can be elusive, usually boiling down to "its worth what someone will pay."

Considerations like the tune spent acquiring an item, company overhead, and procurement costs all factor into pricing, making it a complex equation for many businesses.

• Consumer confidence in recommerce products hinges on authenticity. Electronics need to work flawlessly, and clothing must be genuine, not knockoffs.

While third-party authentication services exist, they add time and cut into margins. Ensuring that a Louis Vuitton purse is truly Louis Vuitton or that Levis jeans are genuinely Levis can be a cumbersome process for businesses.

• As the recommerce sector has grown, it has attracted attention from major enterprises. This influx has made the market more crowded, posing a challenge for new businesses trying to break in and compete with these established brands.

RISK AND CONCERN

The Company has robust risk management procedures to identify and evaluate risks on an ongoing basis. The Company believes that risks that are well managed can create opportunities, whereas risks that are incorrectly managed could lead to financial and reputation loss. Appropriate steps are taken in consultations with all concerned to mitigate such risks. The following are some of the key risks as

perceived by the Company:

- Availability of Labour

The ability to retain existing talent and attract new talent assumes crucial importance. The industry is growing at a fast pace, in a highly labour intensive sector and demand for experienced and trained manpower is outstripping supply. The Company has created long term plans with the objective of motivating employees to create a sense of "belonging" and a ‘feel good environment. The company is also aggressively taking steps to monitor and improve productivity, which will mitigate the impact of labour and material cost increases to some extent.

- Economic Uncertainty:

Slow economic growth in the international or national economies and uncertainties regarding future economic prospects, among other things, could affect consumer discretionary spending and therefore can impact business. Through brand strengthening and expanding presence across the globe the Company endeavours to mitigate the impact of this risk as far as possible.

OUTLOOK

The future of die re-commerce market appears promising domestically as well as globally. In anticipation of growing demand, the company has substantially expanded its installed capacity. Enhancing our presence in additional region will enable us to reach out to a larger population. Further, our Company

believes in maintain long term relationship with our customers by adding value through innovations, quality assurance and timely delivery of our products which will ultimately enhance our sales. It has been a long and motivating journey towards this pinnacle of success and no efforts are being spared to further strengthen the accomplishments of the company.

INTERNAL CONTROL SYSTEM AND ADEQUACY

Management has overall responsibility for the Companys internal control system to safeguard the assets and to ensure reliability of financial records. The Company has an adequate internal control system commensurate with its size and nature of its business. The Company has a detailed budgetary control system and the actual performance is reviewed periodically and decisions taken accordingly. The Company also conducts regular internal audits to test the adequacy and efficacy of its internal control processes and bring out any deviation to internal control procedures.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

In order to achieve operational excellence and maintain a competitive edge, the Company invests in building and nurturing a strong talented pool by instituting best practices with respect to its employees. The Company makes substantive and sustained efforts towards building an eco-system which promotes the development and advancement of all its employees and employees feel a sense of belonging to the Company and camaraderie with their team, and aspire for individual excellence while contributing to achieve departmental objectives.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

- Our Revenue from operations has increased from Rs1501 Lacs(F.Y. 2022-23) to Rs. Rs4956 Lacs during the financial year 2023-24.

- The Depreciation and amortization expense has increased from Rs25 Lacs (FY 2022-23) to Rs27 Lacs (FY 2023-24).

- Our Operating, Administrative and other expenses have been increased from Rs1254 Lacs (FY 2022- 23) to Rs 4204 Lacs (FY 2023-24).

- Net profit has increased from 5145 Lacs (FY 2022-23) to Rs521 Lacs (FY 2023-24).

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONG WITH EXPLANATION

In compliance with the requirement of the Listing Regulations, the key financial ratios of the Company along with explanation for significant changes (i.e., for change of 25% or more as compared to the immediately previous financial year will be termed as ‘significant changes), has been provided hereunder:

CAUTIONARY STATEMENT

Statements in the Management Discussion Analysis describing the Companys objectives, projections, estimates and expectations may be considered as "forward looking statements" within the meaning of applicable securities laws and regulations. The Company cannot guarantee that these assumptions are accurate or will be realized. Actual results could differ materially from those expressed or implied. The Company assumes no responsibility in respect to the forward-looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.