shalimar paints ltd Management discussions

Industry Structure & Developments

The Indian Paint and Coatings Sector had a turnaround in FY 2022-23 following a pause of two COVID-marred years. During the year under review, demand for paint & coating goods increased significantly as a result of the construction and automotive sectors brisk growth. Going forward in next 5 years, Paints Industry is expected to grow from Rs. 70,000 Crore to Rs. 1 Lakh Crore industry, driven by Indias expected GDP growth rate of 6-7% in medium term, which naturally creates a supportive environment for the industry growth.

Indian Paint industry consists mainly of Decorative Paints, Protective Coatings, Wood Coatings, Automotive Paints, Ancillaries, Waterproofing etc. with decorative market being the largest part accounting for over 70% of the market. Paint industry in India is largely dominated by organized players accounting for 65% of the market with mainly 4 large players and significant number of medium level players while the unorganized players accounting for the rest 35%. Slowly but steadily large players are increasing their market share and dominance in the market with unorganized players limited to niche markets.

The industry is divided into two categories - decorative and industrial. The Indian paint sector has grown extensively over the years wherein decorative segment has grown at 11.4% CAGR and industrial paint segment has grown at 7.9% CAGR over the last 12 years. Demand of Decorative Paints that hold 75% of the market is significant during the festive season that arises from household painting and other display purposes. Along with this, the popularity of quality paints and increasing income in tier-1 and tier-2 cities is adding in the growth of the premium market of decorative paint industry. The Indian paints industry by value and volume is expected to grow at a CAGR of around 10% in next few years.

The key growth drivers for paint industry in India, inter alia, includes rising urbanization, improved products, shortening of repainting cycle, decreasing propensity to save, affordable housing, growing middle-class with higher disposable incomes, nuclear family structure, growing demand from smaller towns & rural areas, increasing consumer involvement in the painting process, growing adoption of new styles/ designs/ textures and triggers like government focus on housing & infrastructure development.

Prior to the last financial year, the prices of key raw materials increased significantly due to supply side shortages globally. Further, the cost of solvent based raw materials increased sharply due to rising oil prices. Thus, the solvent based products have faced significant viability problems. As a result, profitability of all the players has been affected significantly in FY 2021-22. The year 2022-23, however, brought in a silver lining with the prices softening up and marketing finally coming back to life post the COVID era.

About Shalimar Paints

Established in 1902, it can be said that the history of Shalimar Paints is closely linked to the development of Paints industry in India. The Company is engaged in manufacturing and marketing of decorative paints and industrial coatings. The Decorative business covers both Interior and Exterior paints where it has a number of flagship brands. The Company also has tinting systems under the brand "Color Space" where it offers more than 12,000 shades across all product lines to its customers.

Some of Indias iconic buildings and structures have been painted with Shalimar Paints. Further, Shalimar Paints also prides itself in partnering to paint worlds longest span steel and concrete arch bridge - Chenab Bridge. The Company currently has three manufacturing facilities, one each at Chennai, Nashik and Sikandrabad (Uttar Pradesh). Howrah units operations remains suspended after fire broke out in 2014.

With the increasing demand for Shalimars products, the Company has planned to double its production capacities in one year time. The Company has increased its distribution reach from 32 sales depots in FY 21-22 to around 38 in FY 22-23 and will be further expanding the same in the current FY. On the back of such promising growth numbers complemented by a significant production boost, the brand is well on its way to pick up the growth trajectory soon. Apart from India, Shalimar also catered to consumers from Nepal, UAE, Bhutan and Seychelles.

The year 2022-23 started on a positive note with the world and India finally getting away from the pandemic era. The news was good for your Company too as this was the first time in a decade that we were able to breach the 500 Crore mark in revenue on gross basis, registering a growth of 36% and gaining market share both in decorative and industrial space.

In FY 2022-23, at Shalimar Paints, we prepared & lubricated our internal and external facing functions and processes to ensure readiness with respect to catering of customers demand in most efficient and timely manner. In Q1, Shalimar registered a healthy growth rate, higher than the industry growth rate. However, Q2 and Q3 were impacted due to extended monsoon and early Diwali, though demand picked up again from November onwards which continued till the end of financial year.

At overall level, Shalimars revenue grew by ~36% with both decorative and industrial combined. Individually, decorative and industrial segments grew by ~36% each. Your Company registered highest growth% in paints industry and, it was among the 3 companies who gained market share in FY23.

Looking into the interest of channel partners, our first gateway to serving your needs, we have also introduced an annual Lakshya Scheme, our exclusive privilege rewards program to help them service your needs. The program also saw significant success with about 65% of our total revenue coming through this program.

Your Company is also investing very heavily in R&D initiatives and is all set to inaugurate a world class R&D center in Nashik in FY 2023-24. The work on the same started in the current FY along with the vision to be among the top 5 companies in India amongst the paint sphere. In the last two financial years, we have invested heavily in this and as a result, your Company has been able to launch around 11 new products. Revenue from new products launched in the previous FY was about 20% of total sales which depicts our deep understanding of the consumer requirements.

To minimize the impact of cost escalation, the Company has taken number of steps. The Company has started to source raw materials based on reverse auction principle. In addition, Company has also started direct import of certain raw materials. In addition, R&D is working on change in formulation to reduce costs. The Company is also trying to control its fixed costs as well as interest costs so that benefit of increased revenue can be reflected in bottom line.

The Company is primarily engaged in industrial and decorative segments with decorative segment contributing almost 65% of the revenue. Within decorative segment, water based paints contribute about 59% of the sales which has shown a good growth over last one year. Your Company is taking steps to increase water based proportion to about 65% in next one year, which should help in improving margins & financials of the Company.

Outlook

The paint industry like many others in the economy, globally, is likely to witness a period of consistent growth for next 5/6 years. There are lot of apprehensions of likely recession for next two or three years. USA is already in recession, technically. UK may be following suit. Indian economy though seems to pegged to grow around 6-6.5%. Going forward, India is expected to become the third largest economy in the world by 2027 and that would definitely be on the shoulders of some extraordinary developments in the field of infrastructure and which definitely would bring in good news for the building materials segment and paint in particular.

We at Shalimar Paints are preparing and doing the ground for the potentially golden period ahead. Plant capacities will be expanded. The facilities will also be modernized and upgraded to meet the increasing demand. The purchase and sales systems are being upgraded and automated to reflect the latest trends. New products are being developed for decorative segments to account for the changing tastes.

The year 2022-23 also saw us foraying into the waterproofing segment with the introduction of Zero Damp, our fiber reinforced product for both horizontal roofs and vertical walls. Looking into the interests of our consumers we also came up with a value for money primer - Super. We are thankful that both of these products were widely accepted in the market by both consumers and channel partners.

Opportunities and Threats

Opportunities:

Paint Industry in India is driven by growth not only in construction activities but also in industrial development. Media exposure and innovative marketing initiatives by the players have also added impetus to increasing awareness about latest trends prevalent in the sector. Due to increased Government funding for infrastructure, paint industry is poised for growth.

A further analysis of key drivers and challenges of the market indicate the factors for growth of the market including boom in real estate construction, growth in industrial sector, increase in disposable income and increased government expenditure on infrastructure. Rising urbanization, supported by real estate demand and improving infrastructure, has been boosting paint demand over the past few years.

Easy availability of housing loans has contributed to increase in number of houses which has directly added to increased demand for paints industry. Also, finance is now more easily available for renovation and repair of houses than before. This in turn, helps to shorten repair cycle.

Your Company is poised to grow in the Decorative as well as Industrial segment. The Company is in the process of reinforcing its current production facilities and is simultaneously expanding its manufacturing base to new geographical locations. Many new products are ready for launch in the coming months.

New entry of modern retail and E-comm players in the category like Hippo Stores, Infra.market stores, YouKraft.com, painting service partners like Aap ka Painter, Urban Company and many more have opened up new channels of selling paint products and engage new influencers. New Age interior designers and architects and the emerging demand for hiring these professionals also brings a new opportunity to connect with them and promote our products.

Threats:

The Cost of Raw materials is an important factor as the industry is raw material intensive. However, the rising raw material cost is still the biggest challenge. As oil prices have witnessed a sharp rise in the past two years, inflationary cost pressures will continue to weigh on margins. Also, a large portion of raw materials are imported, leaving the cost factor vulnerable to exchange rate fluctuation.

The entry of new players in the Indian market may increase the competition among the players of the industry. This may lead to price competition which may impact the profit margin of the companies. As a result, the increase in volume growth may not equally reflect in the profit growth for the companies.

Another threat to this industry is that the competition does not lie just within the paint industry. Any brand, be it into decoration or furniture, in which a consumer is ready to spend money to decorate his home is our competitor.

Risk and Concerns

The evolving nature of the Covid-19 pandemic makes near term predictability a challenge. Though recent stability in the economy is proving beneficial to industry. However, any revival of Covid-19 may prove challenging.

Considering the huge uncertainties prevailing in the market due to war in Europe, the major economies of the world are passing through difficult times.

Paint consumption is positively co-related to GDP growth and therefore a slowdown in GDP would affect the industry directly. Also, paint being a discretionary spend item, there is a likelihood of customers putting their paint requirements on hold for some time, thereby impacting renovation demand.

One of the key challenges for the paint sector is price fluctuation. Since most raw materials used in the production of paint products are petroleum-based, the fluctuation in crude oil prices creates a direct impact on the final paint product that goes to the end consumer.

The vagaries of the monsoon: extended monsoon in some regions and deficit rainfall in others affect demand from the rural sector, as an extended monsoon can reduce the number of dry days before the festive season and deficit rainfall affects income.

The cyclical nature of the decorative paints segment is the biggest loss factor that affects its sales. The demand for this segment is high only during festive seasons when people invest in whitewashing and painting their homes and then go down as they redo it after a long gap of at least 3-5 years.

Import policies also play a key role in deciding the price points as most raw materials are imported from foreign countries. Any change in the tax regime can significantly escalate the painting price.

Another challenge faced by the industry is the new regulation by way of extended producer liability on usage of plastic products. The new regulation mandates that gradually the industry will have to graduate to complete utilisation of plastic waste used as containers/ packing materials to ensure that no waste goes in the environment. This is a big challenge particularly since current technologies are not developed to ensure the same. Shalimar Paints like its peers will have to face this challenge.

Slowdown in infrastructure and construction activities would affect overall demand for paint companies. Delay in the revival of the auto industry would continue to pose a threat to the growth of industrial paints demand. In the post-COVID era, however, the challenges will change drastically.

Information Technology

At Shalimar Paints, Information Technology ("IT") drives innovation and adoption to bring a competitive edge to the business. IT has been automating sales, manufacturing, planning, distribution, finance & HR processes. IT at Shalimar is working towards bringing "Business Transformation through Digital Transformation."

IT Department is working collaboratively with different Departments to enhance productivity and address business problems. During the year under review, Sales Force Automation was implemented which measures different KPI against the targets. Different KPI can be chosen as focused KPI in a particular period. It has geo tracking and fencing, it is tightly integrated with SAP which gives real time data visibility to sales force on ground. Interaction with customers can be recorded which makes visit more fruitful. Order creation and processing is linked with App. Sales Force can plan their journey in advance and can track progress and outcomes. Visibility of stock, customer outstanding etc. are helping to serve customer in a more planned way.

Different backend process automation and refinement like Secondary Freight Automation is in process of implementation which will provide the visibility of delivery, Timely POD, mismatch reporting, reconciliation of vendor bills, load planning and vehicle tracking. Automation of procurement process from PR- RFQ-Contract to PO has streamlined the process. Vendor Discounting on Payment has helped to optimize the working capital and Fund Flow. To increase the agility in the system, Mobile based Workflow approval App is in place now.

Timely and accurate availability of data with analytics which calls for actionable is a key factor in decision making. BI was introduced to empower the users and have data driven decisions. Different dashboards, automated reports, reminders are setup in system for Finance, Supply Chain, Sales, Inventory, Production which have direct impact on Top line and Bottom Line.

The Company offers different schemes to customers as per the sales strategy and Product Mix. These schemes are very dynamic. Scheme processing system is in place which is giving real time visibility of Scheme and its impact. This is helping to launch impactful schemes with analysis of objective met. Initiatives are taken in different domains like Batch Management of inventory, Vendor Balance confirmation, Customer Balance confirmation.

Our IT Infrastructure has also improved. We have upgraded our network, moved to cloud as strategy, redefined our IT Policies and implemented the same. We have upgraded the Desktop and Laptops of almost all the employees.

This financial year we are working on upgrade of SAP system to S4 HANA, System driven planning and Journey Plan with Route Optimization, empowerment of our Sales Force with System driven nudges which will help in conversion ratio, implementation of AI chatbot for internal and external users to automate process which require minimum human intervention, implementation of R&D Software for visibility and shortening the product development cycle.

In the competitive world where organizations face tremendous pressure to cut costs, the supply chain plays a pivotal role. At Shalimar, the supply chain not only strives to fulfil customer demands but also builds trust among customers.

Aligned with the above commitment, this year we are opening 15 new warehouses to improve serviceability and speed in deliveries, as well as increasing warehouse storage capacity to build up sufficient stocks. We are also introducing a transport management system (TMS) to streamline secondary transportation and facilitate faster order execution. Additionally, we are creating a large database to derive actionable insights from the data. With improved demand forecasting and production planning, our aim is to respond quickly to any sales requirements.

We are conducting performance analysis, identifying bottlenecks, and implementing process optimization initiatives to improve the overall efficiency of our warehouses. Through the optimization of demand forecasting, supplier management, logistics, and collaboration, the supply chain department aims to reduce the cost of logistics by 12%.

HR Initiatives

A business is only as successful as its employees, and that goes for any industry. Whether you are a leader in an office, a retail store or an online business, the rules of leadership apply. Even the most amazing employees need direction and encouragement to succeed. Guidance is paramount to maintaining a positive atmosphere at work, which, in turn, will boost productivity. To promote a positive workplace in which employees go above and beyond to achieve organizational goals, we need to lead by example and take advantage of everyones strengths. In order to achieve the same, during the financial year 2022-23, various initiatives were taken by the Company under multiple HR domains:

Attracting Talent: Your Company hired 100+ new employees across functions including the Leadership team and next line to the Leadership team. With this, we have a strong team at the senior level who can guide and coach the team below to drive growth for the Company. Besides new hiring, we have also done a significant number of replacement hiring particularly in Sales team.

Your Company has started using Social media platform like Linkedin for job postings as well as an opportunity for posting major events and activities within the Company to help us in attracting talent. With this, we have seen a significant increase in the number of subscriber base for our Companys Linkedin. We have created some success in converting this to our hiring needs. This activity has helped us to give a message to the market about Shalimar 2.0 and the way we are transforming the Company in a better way.

In order to create a future bench for R&D and Manufacturing, the Company has successfully recruited 11 GETs via campus hiring from HBTI Kanpur, who would be joining the Company in FY 2023-24.

Early in the year, considering the importance of generating the secondary sales for the Decorative business and hence to support our business, the Company hired about 50 Business Development officers, whose primary task is to generate leads from the Painter, Contractor and Architect base and convert them into our painter programs. Seeing the success in Decorative Business, we have started this for our Industrial business as well.

For reducing our dependency on Contractual labours in our plant locations, we have started with the program of hiring ITI and Diploma engineering graduates who can give us better productivity and a better stability. We have seen good success of this program in our Sikandrabad plant.

Employee Engagement and Retention:

Reward and Recognition: As rewarding and recognizing employees leads to greater employee engagement, increased retention, increased productivity, increased peer competition and helps to create a positive overall workplace. In line with this philosophy, Company has taken initiative of recognizing and rewarding exceptional performers from sales team every month based on their monthly performance by introducing Shalimar Premier League. An Annual Virtual All Hands meet was organized in the first quarter to reward exceptional performance for the year across all functions. Further, Kaizen and Manufacturing Excellence Awards are being given to the plant team on a monthly basis.

Employee Stock Option Plan (ESOP): Your Company has launched ESOP for its employees to make them partner with Companys growth and get a share of return. This is a 4-year scheme with 25% vesting happening at the end of every year from the grant date.

Coffee with HR: A monthly engagement program has been started in plants which is "Coffee with HR". Some benefits are:

1. Improved communication: Coffee with HR provides a casual sitting for employees to ask questions and share their thoughts with HR representatives. This helps HR to better understand employee needs and concerns, and fosters a culture of open communication.

2. Increased engagement: Employee engagement is critical for retention and productivity. By providing opportunities for employees to interact with HR, companies can improve engagement and create a more positive work environment.

3. Better understanding of policies and procedures: Through Coffee with HR, employees have been able to gain a better understanding of HR policies and procedures, which helps them make more informed decisions and avoid misunderstandings in the future.

4. Enhanced company culture: A company that values employee input and feedback is more likely to foster a positive culture than a company that does not. Coffee with HR has helped to create a culture that encourages collaboration and transparency and building trust between employees and management.

Celebrations: Fun at workplace plays an important role in keeping the work environment lively and enthusiastic. In terms of celebration, we had celebrations on all important occasion such as Diwali, Holi, Christmas, Womens Day, Companys success on breaking old records, Birthdays etc.

Flexi Benefit Plan (FBP): Flexi Benefit Plan was launched for all employees this year thus allowing them to choose for flexible basket of options to help in saving taxes. Employees can now restructure their special allowance and get tax benefits.

Product Discount Policy: Being a Paint company, it was our aim through this policy to provide paint to our employees at discounted price.

Travel Portal: To make travel bookings more convenient, we introduced MakemyTrip online portal for our employees where the employees can do a self booking which gets debited from the Companys wallet. This has helped in saving booking time and also helped in saving cost.

Rewarding SIP programs: Sales Incentive Programs for the year were designed to boost growth as well as to reward the Sales team for their effort and results. This year the SIP earnings have been one of the highest.

Quarterly PLVP (Performance Linked Variable Pay): PLVP which was an annual variable pay program for Non sales team was made a quarterly payout this year so that there is an immediate performance feedback and an immediate pay for performance.

Employee Engagement Survey: An employee engagement survey was conducted during the year in Q4 to assess the levels of engagement for our employees. This survey was facilitated internally and the questionnaire was designed to cover all the indicators of Engagement. The survey gave us an all India score of 95% which means that 95% of our employees are engaged with the Company.

Developing Talent: In terms of development and to support the business growth, various inhouse and external training programs related to Companys products, technical skills, selling skills, negotiation skills, MDP/ Leadership (IIM Lucknow for few leaders) etc. were organized by the Company. Besides these interventions, regular Induction/ Orientation programs for new joiners are being organized to bring them upto speed and to familiarize with company policies/ practices and culture.

HR Automation: The Company is working on an end-to-end HRMS tool which would help us digitize entire employee life cycle be it recruitment, performance management, travel and expense management, leave and attendance management, employee engagement etc.

Culture of Safety: Safety of our employees at plant is of utmost importance for us. Hence, the Company organized a campaign called "SADAK SURAKSHA JEEVAN RAKSHA" at our Chennai plant from 7th Feb to 14th Feb, 2023. In relation to prevention of illness, free Annual Health Check Camps were organized across Chennai, Nashik and Sikandrabad Plants.

RACE Program: "RACE" is the campaign in Plants, which stands for - Reduction in plastic usage, Awareness among masses, Circular solution to disposal and Engagement of one and all. In a bid to phase out single-use plastic items by 2023, Centre has announced that India will ban the manufacture, import, stocking, distribution, sale, and use of identified single-use plastic items with low utility and high littering potential. All Plants of the Company had organised Rally program in all Industrial/nearby area with taking Pledge and sharing ideas for alternate of single use Plastic items in our life.

Marketing

Marketing holds a crucial significance in educating consumer and driving customer awareness and interest for a consumer facing company like Shalimar Paints. To achieve this, the Company has adopted a tiered network strategy that focuses on engaging with influencers on regular basis. Shalimar has become more "painter-centric" with the Shalimar Paints EXPERT painter program, where painters earn loyalty points on purchasing Shalimar paint products from its authorized dealers.

The loyalty program is best in the category offering top class monetary and non-monetary benefits to the registered painting contractors. Painters are getting benefits out of this program as they have redeemed Mobiles, TV, Gold and Silver Vouchers, Amazon Cashback Vouchers, and even automobiles from their accumulated points. The painter base has surged with 30,000 new painters registering in the program last year, crossing an impressive 90,000+, highlighting their trust in the brand and in its products. Not only new painters had joined, but the program saw a 25% growth highlighting the loyalty of painters towards the brand.

We are committed to further nurturing these invaluable relationships and are proud to announce our strategic digital partnership with PayTm to enhance the Loyalty program mobile application that now offers direct bank transfers (DBTs) for accessing cashback rewards instantly. It also supports more than 11 Indian regional languages for greater inclusivity.

We are also conducting on-ground touch base events with the painters via pre-planned Painter Meets, that is done with strategically important dealers across regions.

To further strengthen our bond with the painters and drive awareness about our products and the loyalty program, from this year onwards we started conducting "NAKKA meets" across the country. NAKKA meets are conducted at various labour and painter chowks in the city early in the morning, where painters come to find work on daily basis. This is another grassroot marketing initiative that activates the consumers right where they are. Over 250+ NAKKA meets are done every month across India with the help of our network of field sales staff and Business Development officers.

We also partnered with Aap Ka Painter.com to increase brand visibility amongst premium consumers across key metro cities and multiple houses have been painted using Shalimar paints premium emulsions under this collaboration.

In the digital world, we have planned multiple digital initiatives to transform the brand to a digital first and initial steps towards that includes the digital revamp of the painter loyalty application. In addition to that, we have invested in an AR Driven color visualizer mobile application that is set to launch in August 2023 and will revolutionize the consumer experience with augmented reality capabilities, allowing consumers to not only preview their homes with colors but also add furniture and interiors elements to re-imagine their spaces with a 360 degree AR experience.

Leveraging the power of social media, separate social handles for Shalimar Brand and Shalimar Expert Painter program have been initiated and we shall start engaging with our audiences digitally.

Shalimar Paints new products launched in FY 2022-23:

1. Zero Damp - Monsoon Shield for Your Home: A 2017 study by the National Building Research Institute (NBRI) found that over 50% of homes in India suffer from dampness. Considering this opportunity, we ventured into the waterproofing category and launched HOME

PROTECT range of waterproofing products. First product launched under HOME PROTECT range is Zero Damp, an 8-in-1 waterproofing solution that offers waterproofing, crack-healing, anti-fungal and anti-algal properties, solving monsoon-related seepage issues and ensures happy and healthy interiors and exteriors. Available in four pack sizes with an 8-year warranty. The product contributed 1.5% of additional revenue contribution to our business.

2. Super WTCP - Primer for Interior Brilliance: Specifically designed for interior surfaces, Super WTCP is an acrylic emulsion-based primer that dries quickly, recoats fast, and delivers a smooth finish. Perfect for tier 2 customers seeking quality and value for money product, this primer solves the problem of achieving flawless results on various interior surfaces, making painting projects hassle-free. SUPER water thinnable cement primer contributed 1% of additional revenue contribution to our business.

Internal Control Systems

The internal control system is an integral part of the general organizational structure of the Company. The Company has in place the necessary control systems to ensure transparency and security of its transactions. However, the same are being upgraded keeping in view the increased threats. The purchase, sales, procurement, payment and other operations are being automated. Checks and balances are being strengthened at each level. The system is highly structured and totally in sync with the size and nature of its business. External audit firms are appointed at various locations of the Company to conduct regular audits. The internal control system is basically a set of rules, regulations, policies and procedures which run on softwares with in-built authorizations for enhanced control. The organization is appropriately staffed with qualified and experienced personnel for implementing and monitoring the internal control environment.

Financial Performance

Your Company during the year under review has suffered a loss of Rs. 3,610.50 lakh as against loss of Rs. 5,996.95 lakh in the previous year, on standalone basis. The revenue from operations of the Company for the financial year 2022-23 stood at Rs 48,555 lakh as against Rs. 35,819.33 lakh in the previous year.

While revenues of the company have grown by about 36%, mainly due to healthy change in the mix of water based products and in specific emulsion portfolio, the profitability has improved further mainly due to global reduction in the raw material prices. The gross margin of the Company has improved from 26% to 28%. Also, there is a major reduction in finance cost due to repayment of loans during the year.

Particulars	Standalone		Consolidated
	FY 2022-23	FY 2021-22	FY 2022-23	FY 2021-22
Revenue from Operations	48,555	35,819	48,555	35,819
Other Income	721	493	721	454
Profit/(Loss) before Finance Cost	(2,020)	(3,085)	(2,025)	(3,125)
Finance Cost	1,590	2,230	1,590	2,228
Profit/(Loss) before Tax	(3,610)	(5,315)	(3,615)	(5,353)
Exceptional Items	-	(741)	-	(741)
Tax	-	(59)	-	(59)
Profit/(Loss) after Tax	(3,610)	(5,997)	(3,615)	(6,035)

Key Financial Ratios and details of significant changes therein vis-a-vis immediately preceding financial year

Particulars	As at 31-03-2023	As at 31-03-2022	Reasons of Variance
Debtors Turnover Ratio (in times)	5.22	4.53	Improvement in DSO through regular monitoring resulted in improved debtors turnover ratio.
Inventory Turnover Ratio (in times)	3.41	2.92	Monitoring and controlling of inventory resulted in higher inventory turnover ratio.
Interest Coverage Ratio	-0.47	-0.78	Improvement in margins primarily on account of lower input cost and reduction in finance cost due to repayment of loans has mainly lead to improvement in interest coverage ratio.
Current Ratio (in times)	1.40	1.79	Decrease in the current ratio is mainly due to increase in the current borrowings mainly on account of regrouping of optionally convertible debentures from non-current to current.
Debt Equity Ratio (in times)	0.41	0.49	Decrease in the Debt Equity Ratio is mainly due to repayment of borrowings during the year.
Debt Service Coverage Ratio	-0.47	-0.61	Principal payments of loan and interest burden have been on the higher side leading to lower DSCR.
(DSCR) (in times) Operating Profit	-7%	-15%	Reduction in losses mainly due to improvement in margins and lower finance cost and
Margin (%)			improvement in topline has resulted in the improvement in operating profit margin.
Net Profit Margin (%)	-7.4%	-16.7%	Improvement in margins primarily on account of lower input cost and reduction in finance cost due to repayment of loans have lead to improvement in net profit ratio.
Return on Net Worth (%)	-5.3%	-9.7%	Reduction in losses during the year have resulted in the improvement in return on capital employed.
Earnings per Share (EPS) (Rs.)	-5.00	-10.69	EPS has improved due to reduction in losses.

Forward-Looking Statement

Certain statements made in the Annual Report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward looking statements within the meaning of applicable laws and regulations. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect managements current expectations and are inherently uncertain. Actual results may differ from such expectations whether expressed or implied. Several factors could make significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations, taxation, pandemic and other natural calamities over which the Company does not have any direct control. The Company assumes no responsibility to amend, modify or revise any such statements. The Company disclaims any obligation to update these forward-looking statements except as may be required by law.