Sheetal Cool Products Ltd Management Discussions.


When people think of Ice Cream, they think of happiness, joy, comfort and love. Taking inspiration from these emotions, Sheetal Cool Products Limited started off on a fun filled journey of creating magic in the form of ice-creams and also ventures into ancillary business of milk, milk products, fryms and namkeen.

Our vision is to reach the 1500 crore turnover benchmark by 2030 and we are certain that our footprints will, by that time, be all over the country and even overseas. We run with a mission of providing the best quality of ice creams made in the most hygienic way and offered at an attractive price point.


High trade tensions and policy uncertainty in many countries continue to damage prospects for global economic growth. Following an expansion at 3.0 percent rate in 2018, world gross product growth is now moderated to 2.7 per cent in 2019 and 2.9 per cent in 2020. Among the emerging markets of the world, India and China are on top and now, they have also faced the slowing down in growth in fiscal 2019.

The first advance estimates of national income released by the Central Statistics Office (CSO) had estimated Indias real GDP growth for financial year 2018-19 at 7.2 percent as compared to the growth rate of 6.7 percent in 2017-18. This have been made lowered by the second advance estimates to 7 percent and further lowered to 6.8 percent, slowest in last five years with fourth quarter growth rate of 5.8 percent in provisional estimates of CSO. Amid slowing economic growth and rising global uncertainty, RBI, for the fourth time in a row, decreased the short term lending rate (repo rate) by 35 basis points to 5.40 percent. The Monetary Policy Committee of RBI had also decided to change the stance of monetary policy from neutral to accommodative.


Ice Cream industry in India is largely driven by unorganized sector. India being the largest producer of milk, accounts for over 1/5th of the global milk production, thereby offering large volume of raw material for domestic manufacturing of ice creams.


Indias organized flavored milk and ice cream market is currently estimated at around Rs.6,000 crore with an estimated annual growth of around 30%.Growth is expected to be driven by increasing household disposable income, changing lifestyle patterns and entry of various international ice - cream players in the market along with rising availability of branded ice creams with different flavors at affordable prices.

All the above stated factors in addition to growing demand for innovative ice cream flavors are anticipated to positively impact the ice cream market in India during the next five years. The ice - cream market in India is forecast to exhibit a CAGR of 17.03% during 2016-2021. Keeping up with the economys quantum growth in recent years, the ice cream market has also set new records.

Increasing urbanization, rising disposable incomes and increasing "out of home food" consumption coupled with the ever-increasing availability of various foods in the markets close to residential areas are some of the reasons driving the ice-cream industry.

Distribution plays a key role in the success of our business. The logistics of ice-cream, being a cold chain product, are complex and we are continuously expanding our cold chain distribution network through refrigerated vehicles and deep freezers. We have worked on increasing the physical touch points with our consumers and executed it by putting in place a robust network of dealers, FOWs (Freezer On Wheels) and Ice Cream parlors.


With entry of nationalized players, the industry will face threat of competition and it may impact profit margins. The capital investment for innovation and to serve the ever changing trendy market will increase the input cost to the Company. The Companys Structured Risk Management Process attempts to provide confidence to the stakeholders that the Companys risks are known and well managed.


Your Company has in place internal control systems and procedures commensurate with the size and nature of its operations. Internal control processes which consist of adopting appropriate management systems and implementing them are followed. These are aimed at giving the Audit Committee a reasonable assurance on the reliability of financial reporting and statutory & regulatory compliances, effectiveness and efficiency of your Companys operations. The Internal Control Systems are reviewed periodically and revised to keep in tune with the changing business environment.


The Company has been focusing Ice Cream business while strategically introducing their products into fryms and namkeen segment. The highlights of operation performance of the Company during financial year 2018-19 are as under:

  • The revenue from operations increased by 12.87% to Rs.233.63 Crores in FY 2018-19 (Previous year Rs.206.97 Crore)
  • The growth in revenue is the result of more than three-fold increase in sales from Ice Cream segment. The revenue from Ice Cream Segment increased to Rs.170.85 Crore in FY 2018-19 (Previous year Rs.53.41 Crore)
  • Employee Cost increased from Rs.6.96Crorein FY 2017-18 to Rs.13.81 Crore in FY 2018-19.
  • Finance Cost increased to Rs.3.44 Crore in FY 2018-19(Previous Year Rs.1.36 Crore).
  • The Company has incurred profit before exceptional items and tax of Rs.8.40 Crore in FY 2018-19 in compare to Rs.6.35 Crore in FY 2017-18.
  • Due to fire in factory building, the Company had to bear exceptional loss of Rs.4.32 Crore during FY 2018-19.
  • The net profit after tax decreased to Rs.2.07 Crore in FY 2018-19 from Rs.4.11 Crore in FY 2017-18.

    The human resource philosophy and strategy of your Company have been designed to attract and retain the best talent, creating a workplace environment that keeps employees engaged, motivated and encourages innovation. Your Company has fostered a culture that rewards continuous learning, collaboration and development, making it future ready with respect to the challenges posed by ever- changing market realities. Employees are your Companys most valuable asset and your Companys processes are designed to empower employees and support creative approaches in order to create enduring value. Your Company maintains cordial relationship with its employees.

    Its emphasis on safe work practices and productivity improvements unrelenting. Your Company has more than 225 employees on its rolls as on March 31, 2019.

    Financial Performance Snapshot:

    Particulars 2017-18 2018-19
    Sales/ income from Operations 20,697.08 23,362.54
    Other Income 54.19 355.12
    Sub-Total 20,751.27 23,717.66
    Total Expenditure (before Interest & Depreciation) 19,282.67 21,486.66
    Operating Profit (EBIDTA) 1,468.60 2,231.00
    Operating Margin % 7.10% 9.55%
    Profit/(loss) After Tax 410.77 206.83
    Return on Capital Employed % (EBIT) (ROCE=Total Equity + LT Borrowings) 29.56% 25.42%
    No. of months Receivables (Receivables/Sales*12) 0.17 0.49
    Current Ratio (Current Assets/Current Liabilities) 1.21 1.34
    Debt Equity Ratio (Long Term Borrowings/Net Worth) 0.22 0.91


    The key financial ratios of the Company are as under:

    Particulars 2018-




    Reason for significant Changes change of 25% or more as compared to the immediately previous financial year
    Debtor Turnover 37.41 76.76 Timely realization from customers coupled with increase in sales
    Inventory Turnover 6.18 8.91 Reduction in total Inventory coupled with increase in Sales
    Interest Coverage Ratio 5.49 9.81 Combined effect of reduction in finance cost and improvement in EBIT resulted into higher interest coverage ratio
    Current Ratio 1.34 1.21
    Debt Equity Ratio 0.91 0.22 Increase in Long Term debt neutralized improvement in net worth thus resulted into adverse change in debt equity ratio.
    Operating Profit Margin 9.55% 7.10% Better cost control coupled with higher revenue resulted into better operating margin ratio
    Net Profit Margin 0.89% 1.98% Exceptional Loss occurred due to fire in factory building, inventory and machinery in FY 2018-19
    Return On Net Worth 5.32% 11.16% Exceptional Loss occurred due to fire in factory building, inventory and machinery in FY 2018-19

    Cautionary Statement

    This document contains statements about expected future events, financial and operating results of Sheetal Cool Products Limited, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on\ forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements.

    Accordingly, this document is subject to the disclaimer and qualified in its entirely by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Sheetal Cool Products Limiteds Annual Report FY2019.

    For and on behalf of the Board of Directors For SHEETAL COOL PRODUCTS LIMITED

    Place: Amreli (Bhupatbhai Bhuva)

    Date: August 31, 2019