Tiaan Consumer Ltd Management Discussions.

In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosures Requirements) Regulation 2015, the Management Discussion and Analysis has been given hereunder.

WORLD

Economic activity worldwide slowed down in 2019 for both advanced and emerging economies owing to trade and tariff-related uncertainties between the global powers, along with tepid consumer and investor sentiments.

The World Economic Outlook report published by the International Monetary Fund (IMF) on October 15, 2019 cut its forecast for global growth rate this year to its lowest level since the 2007-08 Global Financial Crisis (GFC). The IMF predicted that the global economy would grow by 3.0 per cent this year down from 3.6 per cent the previous year (2018). It also predicted that global economy would achieve a growth rate of 3.4 per cent in 2020 but with a caveat - this uptick would not be broad-based and durable.

Outlook

The International Monetary Fund (IMF) projects that global economic activity will grapple with unprecedented contraction in 2020, owing to the COVID-19-led lockdown and the consequent suspension of economic activity. As per the IMFs April World Economic Outlook, global growth will contract by 4.9% in 2020, vis-a-vis 2.9% growth in 2019, and subsequently, mark a V-shape normalisation to 5.4% growth in 2021, although half of it will come on a lower base. Further, the global trade volume in goods and services will slip into a degrowth of 11% in 2020 from an already sluggish growth of 0.9% in 2019, before growing by 8.4% in 2021.

INDIA

India continued to be one of the most robust and resilient economies of the world in 2019. During FY20, the economy grew by 4.2%, suffering primarily from inadequate credit availability owing to challenges in the financial sector. The combined impact of muted domestic demand and export markets dragged down capacity utilization of industries.

The Government of India undertook proactive initiatives such as reducing corporate tax rates and offering credit guarantee for financially sound Non-Banking Financial Corporations (NBFCs). The year also witnessed easing of monetary policy by the Reserve Bank of India (RBI) with significant reduction in the repo rate. Driven by fiscal and monetary policy initiatives, the economy began to show early signs of recovery. However, the COVID-19 outbreak in the fourth quarter of the year made recovery an uphill task.

The Government of India has already announced a significant relief package of Rs. 20 trillion, aimed at providing a safety net to the most vulnerable sections of society. Targeted relief measures have also been designed for sectors that are hardest hit by the pandemic such as financial services and micro, small & medium enterprises (MSMEs).

The positive indicators are moderate inflation and low crude prices resulting in declining trade deficit. These factors allow the Government of India adequate room for providing additional fiscal and liquidity support to the economy.

Industry Scenario/India key market trends:

Despite a global slowdown in most other sectors, M&A in the pharma industry remained vibrant throughout 2019. The total value of deals during 2019 stood at US$1.2 trillion. Some of the biggest companies in the industry are consolidating to elevate their position in a highly competitive environment. Increased regulatory pressure from the governments to reduce drug prices and remove potential monopolies is likely to impact margins.

Increasing health and beauty concerns and high demand of skin care products by consumers have a significant impact on this market. With recent innovative products with better formulation attract wide range of consumers. Technological strides and a keen focus on R&D has supported in fueling up the market share of Ayurvedic health care products in domestic as well as the global market. While most e-commerce platforms can expect a seven to ten-fold increase in revenue generation, the growth rate for the online Ayurveda segment is pegged to be higher.

Increasing awareness of benefits of Ayurvedic products, government initiatives to encourage their usage, rising purchasing power to drive demand for Ayurvedic products in India. Ayurvedic cosmetics & skin care products is likely to boost the market over the next five years. Moreover, rising health concerns and awareness of side-effects of allopathy are few of the major factors driving consumer preference for Ayurvedic products in the country. Rising number of exclusive showrooms and increasing availability of Ayurvedic products at multi-branded stores is also boosting sales of Ayurvedic products in the country. The ecommerce market for Ayurveda will not only ride the digital growth wave thanks to increased digital penetration through better internet access, improved security of payments gateways, m-commerce adoption, and Cash on Delivery (CoD) options, but will also benefit from changes in consumer behavior.

Opportunities and Threats:

With the ongoing COVID-19 pandemic, increasing awareness of benefits of Ayurvedic products, government initiatives to encourage their usage, rising purchasing power to drive demand for Ayurvedic products in India. The ecommerce market for Ayurveda will not only ride the digital growth wave thanks to increased digital penetration through better internet access, improved security of payments gateways, m-commerce adoption, and Cash on Delivery (CoD) options, but will also benefit from changes in consumer behavior. Ayurvedic cosmetics & skin care products is also likely to boost the market over the next five years. Moreover, rising health concerns and awareness of side-effects of allopathy are few of the major factors driving consumer preference for Ayurvedic products in the country.

Ayurveda, which had been relegated to the fringes, is once again gaining global prominence in the health care space. Increasing health and beauty concerns and high demand of skin care products by consumers have a significant impact on this market. Technological strides and a keen focus on R & D has supported in fueling up the market share of Ayurvedic health care products in the global market. Players emphasize on launching unique products to suffice the trending demand from the consumers side which has also led to increased sale of the product. Increasing population of women adopting natural and minimal makeup trends have been increasing the sale of Ayurvedic Products globally.

Projects and Outlook:

The market has both organized and unorganized players and the capability and the strengths differ. But both are classified under same industry. So, the organized sector has to work hard to maintain the parameters so that the high standards are maintained, and customers should not lose faith in the practice. Major threats for our industry are regulatory concerns, consumer perceptions and competition. The regulatory agencies all over the world are focusing on the Quality, efficacy, safety and standardization of herbal medicines. Your company has been working in this area. We have demonstrated excellence in and is well positioned in the market for quality products. We rely on repeat business based on the strength of our client relationship and a major portion of our revenue comes from key clients. Initiatives are focused on improving client relationship.

Internal Control System and their Adequacy:

The Company has adequate internal control systems including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control systems provide for all documented policies, guidelines, authorisation and approval procedures. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit committee of the Board. The Companys internal control systems are supplemented by periodic reviews by the Management. The Audit Committee reviews its findings and recommendations at periodic intervals. Companys internal control system is adequate considering the nature, size and complexity of its business.

Human Resources/Industrial Relations:

The company places great emphasis on its employees and believes that they are the core of the Corporate Purpose. The HR mission is to empower employees to make continuous improvements and enhance their professional skills. The company believes in respecting the individual rights and dignity of the people. The company believes that human resources are the most valuable assets and a major driver for achieving its goals. Your company continues to invest in human resources to build new businesses while simultaneously improving the individual & organizational preparedness for future challenges

Risks and Concerns:

Brand-Image:

Looking at the new products range which likely to introduce in next two financial years and availability of competitive products with better brand name acceptance of new name may be a tough job.

Higher Investment:

Being a lesser known brand, company would definitely require to invest heavily behind advertisement, better marketing strategies, and easy accessibility including e-commerce if it wants to become big in herbal space.

Risk related of Raw Materials: Risks associated with key procurement relationships include:

> The availability of raw materials, more particularly availability of quality products;

> The price of raw materials may be subject to material changes in worldwide Pricing levels;

> Input costs such as freight and electricity may be inconsistent or prices may increase; and

> Key supplier relationships may be lost or impaired, contracts renewed on less favorable terms or key suppliers may cease or reduce their operations.

However, the Company plans well in advance to procure the raw materials and purchases its Raw Materials from the domestic reputed supplier located in different parts of the country to mitigate risk relating to availability of raw materials.