Shukra Jewellery Management Discussions


MANAGEMENT DISCUSSION

A. INDUSTRY STRUCTURE AND DEVELOPMENTS AND OUTLOOK:

Indias gem and Jewellery industry has shown remarkable resilience and perseverance in the face of global challenges. Despite inflation in the USA, the Russia-Ukraine war, and the lockdown in China for almost 6 months, a key market, the industry has managed to put up a commendable performance.

AS PER REPORT FROM GEM & JEWELLERY EXPORT PROMOTION COUNCIL

For FY 2022-23, the overall gem & Jewellery exports grew 2.48% to Rs 3,00,462.52 crores as compared Rs 2,93,193.19 crores for the same period previous year. In terms of US dollars, the overall gem & Jewellery exports accounted for $37,468.66 million as compared to $39,331.71 million for the same period last year.

In the month of March 2023, the overall gross exports of Gems & Jewellery at Rs. 21501.96 crores (US$ 2612.65 million), declined 23.75% (declined 29.39% in terms of US dollars) compared to the same period in the previous year, which amounted to Rs. 28198.36 crores (US$ 3699.90 million).

For the period of April 2022 - March 2023, provisional gross export of all kinds of Studded Gold jewellery at Rs. 42457.87 crores (US$ 5294.74 million) grew 6.79% (declined 0.72% in terms of US dollars) over the comparative figure of Rs. 39759.04 crores (US$ 5333.01 million) for previous year.

Real estate segment is improving in India. Particularly Government spending is increasing in infrastructure and public utility sector. Due to enactment of RERA, a better transparency will lead to higher investment in real estate sector.

In the Union Budget 2023-24, a commitment of Rs. 79,000 Crores (US$ 9.64 billion) for PM Awas Yojana has been announced, which represents a 66% increase compared to the last year.

B. OPPORTUNITIES AND THREATS:

India is deemed to be the hub of the global jewellery market because of its low costs and availability of high-skilled labour. India is the worlds largest cutting and polishing center for diamonds, with the cutting and polishing industry being well supported by government policies. Moreover, India exports 75 per cent of the worlds polished diamonds, as per statistics from the Gems and Jewellery Export promotion Council (GJEPC). Indias Gems and Jewellery sector has been contributing in a big way to the countrys foreign exchange earnings (FEEs). The Government of India has viewed the sector as a thrust area for export promotion. The Indian government presently allows 100 per cent Foreign Direct Investment (FDI) in the sector through the automatic route.

In the coming years, growth in Gems and Jewellery sector would be largely contributed by the development of large retailers/brands. Established brands are guiding the organized market and are opening opportunities to grow. Increasing penetration of organized players provides variety in terms of products and designs. Online sales are expected to account for 1-2 per cent of the fine Jewellery segment by 2022-23. Also, the relaxation of restrictions of gold import is likely to provide a fillip to the industry. The improvement in availability along with the reintroduction of low cost gold metal loans and likely stabilization of gold prices at lower levels is expected to drive volume growth for jewellers over short to medium term. The demand for Jewellery is expected to be significantly supported by the recent positive developments in the industry.

Real Estate Sector will have tremendous growth opportunity and company intend to take initiative in the field of real estate and infrastructure sector.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

A detail of segments is given in financial statement.

D. INITIATIVES

The initiatives are being taken by the Company for improving the quality standards and reduction of costs at appropriate level. New machineries are imported to provide better result and to cope up with changing requirement of the industry. The employees at all levels are being made aware of the changing conditions and the challenges of the open market conditions and to train the personnel to tackle the difficult situations which will improve the overall productivity, profitability. Company is negotiating for export orders with international buyers and management is hopeful to achieve higher export turnover during the year. Company has entered in to Real Estate business along with existing business. Company is negotiating for land at Ahmedabad for development.

E. RISKS AND CONCERNS:

Company is in the Gems and Jewellery business and real estate Business and fluctuation in price of commodity in international markets as well as fluctuation of dollar price may impact the entire industry. The unavailability of fund is also affecting Indias position in the international market. Government has restricted import and now days most government of policies are demotivating import of Gold. Today people have more faith in gold than government bonds. Future unfavorable government policies may have impact on business of the company.

While rising interest rates are a cause for concern, the desire for larger, more luxurious homes will also see a surge. The popularity of WFH and hybrid working arrangements has increased the Demand for vacation houses. We anticipate that these trends will continue in 2023-24. To mitigate risk at all level company have experienced management and staff.

F. INTERNAL CONTROL SYSTEM:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function reports to the Chairperson of the Audit Committee of the Board/and to the Chairperson.

The Internal Audit Department monitor and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company.

Based on their part of internal audit function, the company undertakes corrective action in their respective areas and thereby strengthen the controls Significant audit observations and recommendation along with corrective actions thereon are presented to the Audit Committee of the Board.

G. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year under review revenue of a company Revenue from operation has been decreased to 219.96 (Rs. in lakhs) as compared to previous years Revenue i.e. 164.54 (Rs. in lakhs) Company has managed its operations on a same level but profit after tax has decreased proportionately. Company is working hard to achieve good result in upcoming years.

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

The Company believes investing in people though creating an environment where people are valued as individuals and are given equal opportunities for achieving professional and personal goal. Employees relations continue to be cordial. Training and development activities are identified, organizes and progress monitored as part of human resource development activities.

I. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING

During the year under review company had negative growth as total revenue decreased to 164.54 lakhs as compared to previous year revenue 219.96. Most of the financial ratios are not comparable to previous year but major improvement shown to debt service coverage ratio, current ratio etc. Main reason to improve debt service coverage ratio is Due to final settlement of OTS scheme, full and final settlement is done and interest is paid. Following are the details of ratios:

Ratios Ratio (CY) Ratio (PY) Numerator and Denominator explanation Explanation of variation of more than 25%
(a) Debt service coverage ratio 0.05 4.35 Net operating income - Revenue from operations - Cost of sales Debt service - Total borrowings (Short + Long term) Due to final settlement of OTS scheme, full and final settlement is done and interest is paid
(b) Return on equity ratio 0.00 0.20 Net income and total equity is taken from balance sheet Due to no sales in Real estate segment and in PY there was reversal of expense in the form of Stamp and franking charges
(c) Inventory turnover ratio 0.02 0.01 COGS and Average inventory is directly taken from balance sheet Sale is comparatively decreased as compared to last year
(d) Trade receivable turnover ratio 0.28 0.20 Current years turnover reduced in comparison to previous year turn over hence ration are not comparable. Due to long term trade receivables and also sales was done in last month of FY
(e) Net capital turnover ratio 0.16 0.27 Net sales - From Profit and loss Working capital - Total current assets - Total current liabilities Due to increase in working capital
(f) Net profit ratio 3.23 -0.03 Net profit and sales directly taken from Profit and loss Due to no sales in Real estate segment and in PY there was reversal of expense in the form of Stamp and franking charges
(g) Return on investment -53.06% -8.23% Current value of investment Due to change in market value of investment

J. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMIEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF - During the year there is not much change in return on net worth as compared to previous financial year, the same has been mentioned in audited balance sheet.

2. DISCLOSURE OF ACCOUNTING TREATMENT

Appropriate accounting standards were followed in preparation of annual accounts, there is no treatment different from that prescribed in Accounting Standard.

CAUTIONARY STATEMENT

Statements in the Directors Report & Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements.

Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include cyclical demand, changes in government regulations, tax regimes, economic development and other ancillary factors.

REGISTERED OFFICE: BY ORDER OF THE BOARD OF DIRECTORS
PANCHDHARA COMPLEX FOR SHUKRA JEWELLERY LIMITED
3rd FLOOR NEAR THE GRAND BHAGAWATI HOTEL S.G. HIGHWAY BODAKDEV Sd/-
AHMEDABAD GUJARAT 380054 CHANDRAKANT SHAH
Place: AHMEDABAD Director
Date: 02.09.2023 (DIN: 01188001)