Industry Overview
As we reflect on the past year, it is important to acknowledge the
significant challenges we faced in 2022-2023. While the material costs corrected and trade
started demanding lower price due to correction in material costs, the organisation
remained burdened with high-cost inventory, resulting in immense pressure on our margins.
The correction in material costs initially seemed promising, as it presented an
opportunity for us to optimise our production and operational efficiencies. However,
unforeseen market fluctuations and supply chain disruptions restricted the complete cost
advantage due to correction in material cost, thus keeping margins under pressure
throughout the year. Transition of ceiling fans to BEE norms also resulted in liquidation
of some non- rated fans, further creating pressure on margin.
The sewing machine industry has maintained a modest growth trajectory
despite the macro inflationary pressures. While the straight-stitch conventional sewing
machines still account for the largest share in the overall industry, though offering a
limited growth, demand for artisan and industrial sewing machines is growing comparatively
at a much higher rate. Household Zig Zag sewing machines offer a much wider choice to the
household customers in using the machines more than just stitching. Globally, adoption of
household Zig Zag machines has consistently grown due to ease of use and functional
versatility, and a similar growth trend is expected in India. Demand for Embroidery
machines is also growing amongst professional sewing and hobby segment. Government-aided
schemes continue to give its beneficiaries the option of purchasing a sewing machine, thus
there is room for growth in this segment.
The Home Appliances business is expected to grow at a rate of 10-12%,
depending on categories, despite increased competition and major inflationary price hikes.
Changes in demography and consumer attitude towards comfort, as well as increased
electrification in rural regions, is predicted to increase demand for consumer appliances.
While the large market still remains price sensitive, premium segment is growing at a much
higher paceE-commerce and digital-led marketing are promoting pricing competitiveness and
transparency.
Your Company has now decided to focus on six categories including JMG,
Fans, Cooktops, Water Heaters, Washing machines and Air-Coolers. These categories will
have a dedicated approach to product improvement, both in terms of quality and range,
which will be backed by marketing initiatives. Shift from me-too products to newer
designs with differentiated offerings is underway for these products. After-sales service
and quality improvement have always been major focus areas for the Company, and will be
further strengthened significantly. Initiatives to leverage digitisation in service to
improve consumers experience through end-to-end monitoring have paved the way for
improving consumer preference towards the Singer brand.
Outlook & Opportunities
With an optimistic outlook and the prospects indicated above, your
Company will make every effort to improve its turnover, both in sewing machines and
household appliances segments. The E commerce business of Zig Zag sewing machines and
related foot attachments will be refocused with stronger branding and digitisation.
Threats, Risks & Concerns
Your Company has identified the following Risk areas.
1. Increase in competition in all business segments
2. Increase in the raw material prices
3. Price pressure in view of intense competition
4. Supply uncertainty of raw material
5. Fluctuation in Foreign Exchange Rates
6. Supply disruption in import of traded goods
The Board of Directors of the Company and the Audit Committee of
Directors periodically review the Companys risk management policy, taking into account
emerging risks and developing action plans to limit risk exposure.
Segment-wise Performance
Sewing Machines Business
The Companys core business of sewing machines accounts for 68% of
total revenue, providing opportunities to capitalise on its brand equity built over 170
years of selling sewing machines globally and being the Worlds No.1 in sewing machines.
The Company plans to work on cost innovation and value engineering to offer better price
and quality to the consumer, thus aiming to capture higher market share in the overall
industry. It plans to focus on growing the industrial sewing machines segment by
introducing new range of efficient sewing machines at reasonable prices to compete and
expand the market share in this growing segment.
The household Zig Zag machines have a very low penetration in India and
offer a huge potential for expansion. Creating consumer awareness about the ease-of-use
and the functional versatility will be key to growth. The Company will introduce new range
of machines in household Zig Zag category with additional capability of embroidery. To
raise customer knowledge of the different functionalities of these versatile machines,
digital media will be used in conjunction with a virtual training academy. Raising
awareness of the many accessories that can be used to improve the simplicity and
usefulness of a sewing machine will help to upgrade straight stitch machine users and
attract new users to use sewing machines at home.
Home Appliances
The Home Appliances business will continue to drive growth due to low
base. The Company posted total revenue of T147.48 crore for the year under review.
The Company will concentrate on expanding its product line in order to
improve consumer preference and expand reach. To drive profitable growth, the Company will
focus on six product categories, such as Fan, Juicer Mixer Grinder/Mixer Grinder, Washing
Machine, Gas Stoves, Water Heaters and Air Coolers. In order to generate customer interest
in Singer goods, the Company will also launch new items with distinct features.
Collaboration with major and reputable suppliers will be a significant
effort to improve the quality of the Companys products. Strengthening the after-sales
service to promote customer satisfaction would enhance consumer preference for Singers
expanded product line.
After successful upgradation of ERP, we are now working on integrated
WMS system. The QR-enabled system will enhance our end-to-end track and trace capability
with better control on warranty claims. This will also help in managing inventory better
with system controlled FIFO.
Network Expansion
To provide highly skilled sales teams, the Company will create focused
team structure for sewing machines and appliances categories, with deeper understanding of
product, channel and consumer. This will aid in enhancing relationships with consumers,
therefore broadening reach and assisting consumers in making informed purchasing
decisions. These efforts will be backed up by higher spends in digital marketing, in-shop
promotion and in-home product demonstrations. Market for Industrial sewing machines is
growing and the Company will continue to strengthen the team and expand reach to create
stronger presence in this high-growth category. E-commerce will remain a high-growth
channel for the Company with significant appends to improve visibility of new range of
channel-specific products.
Cautionary Statement
Statements in this MDA describing the Companys objectives,
projections, estimates and expectations may be forward looking statements within the
meaning of applicable law and regulations. The Management has based these statements based
on the current expectations and projections about future events. Such statements involve
known and unknown risks, significant changes in political and economic environment, tax
laws, and so on, and may cause actual results to differ materially.
Internal Control Systems and Adequacy
The Company has adequate systems of internal controls for operations,
optimum utilisation of resources, effective monitoring and compliance with all applicable
rules. The internal control system is commensurate with the size and its nature of
operations.
A firm of Chartered Accountants conducts internal audit on a quarterly
basis. The Audit Committee reviews the Audit Reports submitted by the Internal Auditors.
The Committee also meets the Companys Statutory Auditors and the Internal Auditors to
ascertain their views on the adequacy of internal control systems and keeps the Board of
Directors informed of its major observations from time to time, if any.
Human Resources
The Company is committed to implement the highest standards of Human
Resource management principles and strict compliance with regulatory requirements.
To achieve organisational objectives effectively and efficiently, the
Company makes continual efforts in the areas of safety and personnel training.
Disclosure of Accounting Treatment
During the year under review there was no change in the Accounting
treatment. The financial statements are prepared in accordance with the Indian Accounting
Standards (Ind AS).
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
explanation therefore, including:
| KEY FINANCIAL RATIOS |
FY 2022-23 |
FY 2021-22 |
Change |
Change % |
Reason for Change in the ratio by more
than 25% |
| Debtors Turnover Ratio |
10.26 |
9.26 |
1.00 |
10.80 |
- |
| Inventory Turnover Ratio |
4.73 |
4.59 |
0.14 |
3.05 |
- |
| Interest Coverage Ratio |
7.29 |
13.67 |
-6.38 |
-46.67 |
Lower ratio on account of decrease in EBIT
during the current year. |
| Current Ratio |
2.51 |
1.72 |
0.79 |
45.93 |
Higher ratio on account of increase in
deposit with banks during the current year |
| Debt Equity Ratio |
Zero |
Zero |
- |
- |
- |
|
Debt |
Debt |
|
|
|
| Operating Profit Margin (%) |
0.81% |
2.31% |
-1.50 |
-64.94 |
Lower ratio on account of decrease in
operating profit during the current year. |
| Net Profit Margin (%) |
1.81% |
1.69% |
0.12 |
710 |
- |
| Return on Net Worth (%) |
6.12% |
9.95% |
-3.83 |
-38.49 |
Lower ratio on account of decrease in EBIDTA
during the current year. |
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