Sunrise Efficient Marketing Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

BUSINESS OVERVIEW

We are an ISO 9001:2015 certified Company primarily engaged in the business as traders, distributors, super stockiest, retailers, wholesalers, importers, exporters, agents, dealers, buyers, sellers, fabricators, assemblers, fitters, installers, repairers of all types of Industrial machineries, its spare parts, electrical items, electronic items, mechanical and engineering items, pipes, pipe fittings, sanitation parts, all types of machined and un-machined castings, industrial valves and its spares, Oils, lubricants, all types of motors, pumps, generator sets, batteries and all types of electrical, mechanical, electromechanical & electronic items, and spare parts, accessories used for industrial, domestic and agricultural purposes. We are also distributor for FMCG products.

OPPORTUNITIES AND THREATS Opportunities:

Immense growth potential

The Indian textile industry is set for strong growth, backed by both strong domestic consumption as well as export demand.

The textile and apparel industry is expected to grow to US$ 190 billion by FY26.

Threats:

? Supply and availability of raw material

? Competition and price cutting from existing and new entrants ? Development of textile sector ? Credit availability ? Technological changes ? Rate of interest policies ? Economic and Demographic conditions

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company s total Revenue from Sale of Goods & Services stood at Rs. 9683.38 lakhs, resulting an increase of revenue in comparison to FY 2021-22.

OUTLOOK

VISION

To be the preferred and largest Pan India suppliers and exporters of leading domestic and international brands in the field of Electro-Mechanical Solutions, Automation, Fire & Safety, Power Supply, Wind & Solar Energy Products, and Services. We shall be seen as the benchmark for reliable delivery & excellence in after-sales services.

OUR MISSION

We aim to be the leading supplier of reputed brands to the OEM s and end-users across relevant industries. We aim to be the partner of choice for our clients by offering them the latest technologies and value-added solutions always keeping in mind our environmental goals.

ROAD AHEAD

India is working on major initiatives, to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on rise. Government is supporting the sector through funding and machinery sponsoring.

Top players in the sector are attaining sustainability in their products by manufacturing textiles that use natural recyclable materials.

The future for the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. High economic growth has resulted in higher disposable income. This has led to rise in demand for products creating a huge domestic market.

India is going through transition from developing country to developed country. Make in India movement initiated by our respected Prime Minister Narendra Modi has attracted huge Investment in manufacturing industry both from India and from foreign Investors. Our company being distributor and manufacturer of Machinery parts foresee immense opportunity. Moreover we are surrounded by largest Industrial accommodation i.e. Dahej, Ankleshwar, Vapi, Gift City. Our location and presence in such area provide us great opportunity to grow multi fold in such growing face of India.

OUR PRODUCT PORTFOLIO:

We added industry well-known brands in last few years like Redicon Power Build Gear Boxes, Elecon Gears range of products, Kirloskar Brothers Ltd offered us Pumps of Domestic Series, Agriculture Series as well as Industrial Series. We became authorized Dealers for Lubi Pumps Industrial Div. And we are adding on Products, manpower and Geographies.

During the year in addition to above mentioned our product portfolio, we have added newly product CROMPTON MOTORS.

Major products distributed by us are as follows:-

RISK AND CONCERNS

? Metal, which forms the main raw material for the company has inherently been more volatile and it impacts the gross profit margins of the company. ? Continuous Labour availability is very necessary for the company to grow. ? The industry which forms the major portion of the revenue from operations is cyclical in nature; hence depend on overall economic activity.

? Moreover, slow speed of project approval delays revenue recognition.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place an adequate system of internal control commensurate with its size and nature of its business. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly and the business operations are conducted as per the described policies and procedures of the Company. The Audit Committee and the Management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year ended 31st March 2023, your company has recorded a total revenue of Rs. 9773.15 lakhs against Rs. 6510.87 lakhs in the previous year, representing an increase of 50.11 %. During the year, the company has incurred profit of Rs. 800.25 lakhs as compared to profit of Rs. 488.50 lakhs in the previous year. The company was able to keep its operations afloat and has managed to remain focused on network building and human resource development to sustain growth for the coming years.

To conserve resources for the Company s future growth plans, no dividend is being recommended by the Directors for the year ended 31st March, 2023.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Employees are prime assets and a vital key to company s success. The company is committed to creating a professional culture to nurture and enable people to grow in their careers alongside Company s success. The company constantly strives to strengthen its manpower in alignment with the business needs and continue to engage them through various initiatives in the realm of learning & development opportunities, reward & recognition, employee engagement activities and career growth.

The company firmly believes that its human resources are the key enablers for the growth of the company and are an important asset. Hence, the success of the company is closely aligned to the goals of the human resources of the company. Taking this into account, the Company would continue to invest in developing its human capital and establishing its brand on the market to attract and retain the best talent.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The Financial ratios has been enclosed as below :

Sr	Ratio for	Ratio for Variance
No. Particulars	F.Y: 2022-23	F.Y: 2021-22
1. Current Ratio	3.82	1.58 Note: 1
2. Debt Equity Ratio	0.25	1.65 Note: 2
3. Return on Equity Ratio	0.24	0.61 Note: 3
4. Inventory Turnover Ratio	7.49	7.43 Note: 4
5. Net Capital Turnover Ratio	2.75	6.37 Note: 5
6. Net Profit Ratio	0.08	0.07 0.66%
7. Return on Capital Employed	0.24	0.50 Note: 6
8. Trade Receivables Turnover Ratio	5.95	4.46 Note: 7
9. Trade Payables Turnover Ratio	16.73	8.09 Note: 8
10. Debt Service Coverage Ratio	10.66	9.84 Note: 9

Note: 1

Due to successful first initial public offering (IPO), company had inflow of working capital which helped company to manage fast payments to creditors, also company used lesser working capital facility of bank and hence overall short term debt of company reduced, moreover company had significant short term loans & advances and thus company s current ratio sharply increased in comparison to previous year.

Note: 2

The company had issued its first initial public offering (IPO) i.e. 13,80,000 equity shares at premium of Rs. 111/- per share, which contributed to a rise in the companys share premium account resulting in increase in Net worth. Also, Company could achieve decent profit hike further adding to Net worth of the company. On the other hand, Company paid off some of its working capital finance and thus in overall company s Debt Equity ratio declined.

Note: 3

The firm had successfully completed its first public offering (IPO) by issuing 13,80,000 shares @ 121/- per share (having face value 10 per share), and thus number of shares in company increased. Thus, even though its net profit after tax climbed, the profit split among shareholders declined comparatively.

Note: 4

Company s Inventory Turnover was stable and was in line with previous year. Company purchased & stocked some Inventory in anticipation of price rise due to Russia Ukraine war. However, company is looking forward to increase Inventory Turnover in coming year."

Note: 5

There was significant increase in the sales turnover of the company along with increase in short term loans advanced and henceforth the Net capital Turnover Ratio had declined in comparision to previous year.

Note: 6

Due to the increase in the base i.e companys capital which had been increased because of initial public offering (IPO), the fluctuation in Return on Capital Employed in comparison to the previous year had decreased.

Note: 7

With help of efficient leadership team and robust marketing strategies, Company could achieve 51% higher Turnover as compared to previous financial year. Moreover, company ensured timely collection of its debts and its sales engineers were incentivized to bring in timely collection of receivable. This strategy paid off in terms of higher Accounts Receivable ratio and increased Sales engineers job satisfaction.

Note: 8

With Infusion of IPO money, the company s management was in position to use it to pay off its accounts payables more quickly than it did the previous year, thus, the accounts payable turnover ratio for the company increased from the prior year. It helped company purchase goods at more favorable rates helping company achieve higher profits.

Note: 9

With significant increase in Turnover and efficient purchases, company could achieve 60% higher EBIDTA. Compared to the same, Company s Finance cost increased marginally only that also consist majorly interest cost to use working capital. Thus company could secured higher DSCR.

RETURN ON NET WORTH

In Lakhs (INR)	FY 2022	FY 2023
Net Profit	488.5	800.25
Net Worth	798.04	3267.83
Return on Net Worth	61 %	24 %

For SUNRISE EFFICIENT MARKETING LIMITED

	Sd/-
	Hemantrai Thakorbhai Desai
Date: 05/08/2023	Chairman and Wholetime Director
Place: Surat	DIN: 08787617