Shangar Decor Ltd Management Discussions.
Overview of the Economy:
As per the revised estimates for GDP data released by Central Statistical Office (CSO), the GDP is to grow at 7.4% in 2018-19 as against 6.9% in 2017-18. While the industry and services sector are estimated to grow at a higher rate in 2018-19 than that in 2017-18, the agriculture sector was also affected adversely by shortfall and unseasonal rains. The economy of India has emerged as one of the largest economies with a promising economic outlook on the back of controlled inflation, rise in domestic demand, increase in investments, decline in oil prices and reforms among others. More benefit to the Country is that it has got stable Government with good support at Central level after long.
As per Global Economic Prospects Report, the global economy is expected to grow 2.8 percent in 2018, slightly less than forecast. Developing country growth, buffeted by falling commodity prices, the stronger dollar, and tightening financial conditions, has been revised downward to 4.4% in 2018 but is expected to pick up momentum and reach 5.3% in 201819.
Industry Structure and Development:
The growth of Companys Services is based on the push-and-pull effects of Demand and Supply determinants like the economic trends in India & Outside, growth of infrastructure. It always remains key area of the Company to provide innovative Service in design and finishing to the customers without compromising with quality. Today, the per head income in India is increased which converted into purchasing power of a person. However, looking to the stability of Central Government, clear vision and mission of Government to provide Stable income to every family at possible level etc. the growth rate of this industry is expected around 7 to 8% in coming year. The population in India has the youngest persons in the world. The mixture of newness and economic productivity is result into investments in interior as well as exterior decoration. In India urbanization is the big matter which may generate more demand for Decoration Services and will result into increase in demand of associated products.
Opportunities and Threats: Opportunities:
> Good Brand Image: Company has good brand image and quality Services in the Indian market.
> Wide Service range: Company has Very Wide service Coverage as compared to others.
> Superiority over its competitors: Company remains eager in providing latest designs and Service to its customers.
> Online Services: Company Provide Online Services to its Customer. The company will take effective steps to take benefit of this opportunity.
> Expand Market Network: The Company continues to expand its marketing networks, by appointing Consignment Agent, branches, distributors, dealers etc. in various states in all over the country.
> High Competition Era: The Decor Industry has entered into the orbit of the high competition. The market fights are set to intensify with unstoppable capacity build up. The Competition from both unorganized and other organized players, leading to difficulties in improving market share.
> Manpower: The one of the common problem emerged for finding talent with competence or even skilled man power for Decor industries irrespective of the company Brand or Size.
> Under cutting of price: Due to high competitions in market, the competitors are doing price cutting of Services to compete or keep their existence in markets which is ultimate big problems for the industries.
> New Entrance: More and more new organized players are entering into market which will increase competition in organized sector also.
Segmentwise Financial Performance:
Decorative, commercial and other Service division is acting very soundly. The company is also focusing to capture rural market along with urban market. Turnover of the company decreased marginally from Rs. 7.59 Cr to Rs. 6.22 Cr as compared to previous financial year.
During the year, Company has entered into a major service agreement with Dayaji Anavil Kedavni Mandal for its six properties in the city of Surat, Gujarat for Decoration Business. This agreement is likely to have major impact on the performance of the Company.
The company has also planned course of action for achieving more improved margins by better control over fixed overheads and better resource management in the next year. Directors are hopeful for higher turnover and improved margins for the next year.
The Companys outlook for the year 2019-20 is to add more products in the product range as per requirement in the market. After a long time, Country got a fully supported and stable government which may benefit to the Decor Industry. However, there may be possibility of entrance of new organized and unorganized industries in this sector, the supply may beat to demand which can cause price volatility in the market. But, having modern decorative materials the products of our Company may be in position to capture emerging prospects and to face the market risk or competition.
Internal Control Systems and their Adequacy:
Company has an adequate Internal Controls system aimed at achieving efficiency in operations, optimum utilization of resources and compliance with all applicable laws and regulations. Your company has internal control Department which carried following activities on regular basis.
> Reviewing accounting system and related controls.
> Examining management of financial and operating information.
> Examining the economy, efficiency, effectiveness and proprietary of operations.
> Identifying the risks in relation to key business processes and verify whether an effective control exists to mitigate these risks.
> Suggesting measures for optimizing the Business Process Controls.
> Reviewing adherence to corporate policies.
> To examine and audit the areas in consultation with the management and to report on critical issues the internal controls Department headed by Internal Auditor of the company. The Companys internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations, and the protection of the Companys assets and so that the main company risks (operational, compliance-related, economic and financial) are properly identified and managed over time. The Board of Directors, responsible for the internal control system, sets the guidelines, verifying its adequacy, effectiveness and application.
Material Developments in human resources / industrial relations front, including number of people employed:
The Company always recognizes the importance of manpower. Company promotes employees to attend outside seminars or programs related to their fields and motivational which encourage them to make contribution toward company, family and nation at large. Company also encourages to the employees to offer their creative suggestions for development in their respective areas which are thoroughly discussed in periodical meetings. The company enjoyed excellent relationship with workers and staff at its manufacturing plants and administrative office. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the upper growth.
Discussion on Financial Performance with respect to operational performance:
During the year under review, Company earned net profit of Rs. 19.26 Lakhs compared to last years net profit of Rs. 18.75 Lakhs. Though the Turnover of the Company declined, Net Profit of the Company has increased marginally.
During the year 2019, Company has completed a major contract of Rs. 2.50 Cr. of Lok Sabha Election of Government of India. During the year, Company has entered into a New Service Agreement for Decoration Business with Dayaji Anavil Kedavni Mandal which owns Six properties in the City of Surat, Gujarat. Company is likely to have major impact on the financial performance in the coming years.
Statements made in the Management Discussion and Analysis describing the various parts may be "forward looking statement" within the meaning of applicable securities laws and regulations. The actual results may differ from those expectations depending upon the economic conditions, changes in Govt. Regulations and amendments in tax laws and other internal and external factors.
|For Shangar Decor Limited|
|By Order of the Board|
|Samirbhai R. Shah||Saumil Shah|
|Date: 05st September 2019||Managing Director||Director|
|Place: Ahmedabad||DIN 00787630||DIN: 01601299|