tiaan consumer ltd share price Management discussions


A. Overview of the Indian Economy:

Driven by the pent-up demand, widespread vaccination coverage, rising employment and substantially higher private consumption, India recovered from repeated waves of COVID-19 pandemic shock to overtake the UK and become the fifth-largest economy in the first quarter of FY 2022-23. However, with the global economy entering a phase of severe slowdown, India could not remain insulated from these developments. As the year progressed, Indias economic growth slowed and dropped to 4.4% in the October-December quarter from 6.3% in July-September. The slowdown resulted from an easing of pent-up pandemic-era demand, continuing weakness in the manufacturing sector, and the fading of the pandemics low base effect. But in the fourth quarter, Indias economic growth accelerated to 6.1%, boosted by government and private capital spending. This has resulted in full year growth of 7.2%, a level that makes it the worlds fastest-growing major economy.

India is primarily a domestic demand-driven economy, with consumption and investments contributing to 70% of the economic activity. With more than 100 unicorns valued at US $332.7 Billion, India has the third-largest unicorn base in the world. The government is also focusing on renewable sources to generate energy and is planning to achieve 40% of its energy from non-fossil sources by 2030. The increased capital spending on infrastructure and asset-building projects is set to increase growth multipliers for the economy.

B. Outlook:

The Indian economy is expected to benefit from recovery in consumption propelled by increasing normalization of activity, higher rural income, continued emphasis on infrastructure spending by the government, and an incremental boost from pent-up household savings. The Governments CAPEX is budgeted to grow to 2.9% of the GDP in FY 2022-23, highest in nearly two decades. Private corporate investment is also expected to rise with improvement in demand, leading to increased manufacturing sector capacity utilization and rollout of the Production-Linked Incentive Scheme. The RBI expects real GDP to grow by 7.2%1 in FY 2023, however remains conscious that the outlook could potentially be impacted given sustained inflation pressures in the next few quarters (including the impact of Russia - Ukraine conflict), quicker tightening of financial conditions with RBIs rate hikes, high oil prices impacting current account balance and fiscal deficit, while being mindful of subsequent COVID-19 outbreaks.

C. Industry structure and developments:

Accounting for 51% of the Private Final Consumption Expenditure, Indias retail market was sized at 55 trillion in 2020, reflecting a CAGR of 5% over the last 4 years. This growth was driven by the following factors: rising income levels, up gradation in consumer behavior, surge in demand from Tier 3, Tier 4 cities and rural markets, increased youth spending, improvement in infrastructure and the entry of new Indian and global brands across product categories. Indias retail sector was impacted by the first wave of COVID-19 in 2020, where both the supply and demand of most consumer goods adversely affected. Even post lockdown being lifted, consumers were apprehensive about stepping out of their homes. This led to a 14% decline in the retail market size in 2020. Yet, the impact of the second wave in 2021 was relatively limited due to the localized nature of lockdowns and gradual easing of supply chain disruptions. Therefore as the pandemic eases out, the retail market is expected to bounce back in the coming years and grow at a CAGR of 11% to reach ~ 91 trillion by 2025.

D. India Online Beauty and Personal Care Market:

Key drivers of growth here include increasing online shopping penetration in Tier-2+ cities, sustained investments in growth of the sector, rising affinity for branded products, wide assortment, increasing need for convenient shopping experiences, rising adoption of e-commerce by Gen-Zs and millennials, and higher consumer trust on products bought online. Online BPC retail platforms are effectively resolving challenges faced by consumers and brands with the help of superior application of technology, efficient supply chain and quality control, access to a wider selection and authentic products and brands (including niche luxury brands), original content with advice from experts, door-step deliveries, and wider geographic reach in a fragmented category.

E. Opportunities and Threats:

Opportunities:

The Online Beauty and Personal Care Market in India grew at a promising 60% CAGR between 2016 and 2020, reaching 91 billion in 2020, representing 8-10% of the Indian Beauty and Personal Care Market. The sector is expected to grow at 35%+ CAGR over the next 5 years. Key drivers of growth here include increasing online shopping penetration in Tier-2+ cities, sustained investments in growth of the sector, rising affinity for branded products, wide assortment, increasing need for convenient shopping experiences, rising adoption of e-commerce by Gen-Zs and millennials, and higher consumer trust on products bought online. There is substantial headroom for greater penetration in India, in the context of online penetration of more developed markets such as the United States (20-25%) and China (35-40%) in 2020. Online BPC retail platforms are effectively resolving challenges faced by consumers and brands with the help of superior application of technology, efficient supply chain and quality control, access to a wider selection and authentic products and brands (including niche luxury brands), original content with advice from experts, door-step deliveries, and wider geographic reach in a fragmented category.

Threats:

The Consumer Products Industry has entered into the orbit of the high competition. The market fights are set to intensify with unstoppable capacity build up. The Competition from both unorganized and other organized players, leading to difficulties in improving market share. The one of the common problem emerged for finding talent with competence or even skilled man power for Consumer Product Industries irrespective of the Companys Brand or Size. Due to high competition in market, the competitors are doing price cutting of Services to compete or keep their existence in markets which is ultimate big problems for the industries. More and more new organized players are entering into market which will increase competition in organized sector also.

F. Segment-wise or Product-wise performance:

The Company is primarily engaged in single segment i.e. dealing in Consumer Products.

G. Risks and Concerns:

The risks are identified based on their likelihood and severity and are categorized into critical and noncritical risks where the high and medium risks are part of critical risks while the low risks are part of noncritical risks.

Identifying and managing risks that have the potential to affect our objectives and operations is an essential part of our risk governance framework. Company has empowered its group functions, making them accountable for risk identification within their area of responsibility and these are presented to the Management. These material business risks are also regularly reported to the Board, along with their controls and mitigation treatments. Risk function facilitates the conversations and help monitoring the action plans. Critical risks are escalated through existing reporting lines.

H. Material Developments in Human Resources / Industrial Relations:

Industrial Relations continued to be harmonious and cordial throughout the year. The Company always valued its Human Resources and believes in unlimited potential of each employee. Your directors believe and affirm the importance of developing human resources, which is the most valuable asset of your Company and the key element in bringing all round improvements and achieving growth. The human resource philosophy and strategy of your Company has been designed to attract and retain the best talent. In practice, it creates and nurtures a work environment that keeps employees engaged & motivated. Employee relations during the year under review were peaceful. The contribution and co-operation received from employees across all levels was excellent and the same has been appreciated & supported by the management through its continuous & systematic training programmes.

I. Internal control systems and their adequacy:

The Company has an independent Internal Audit function with a well-established risk management framework. The scope and authority of the Internal Audit function are derived from the Internal Audit Charter approved by the Audit Committee. The Company has engaged a reputable external firm to support the Internal Audit function for carrying out the Internal Audit reviews.

The Audit Committee meets every quarter to review and discuss the various Internal Audit reports and follow up on action plans of past significant audit issues and compliance with the audit plan. The Chairperson of the Audit Committee has periodic one-on-one meetings with the Chief Internal Auditor to discuss any key concerns.

Additionally, the following measures are taken to ensure proper control:

Budgets are prepared for all the operational levels.

Any material variance from budget has to be approved by the Commercial director. Any major policy change is approved by the managing director. Any deficiency in not achieving target is reviewed at management meetings.

J. Discussion on financial performance with respect to operational performance:

The financial performance of the Company for the Financial Year 2022-23 is described in the Directors Report of the Company.

K. Material developments in Human Resources / Industrial Relations front including number of people employed:

The cordial employer - employee relationship also continued during the year under the review. The Company has continued to give special attention to human resources.

L. Caution Statement:

Statements made in the Management Discussion and Analysis describing the various parts may be “forward looking statement” within the meaning of applicable securities laws and regulations. The actual results may differ from those expectations depending upon the economic conditions, changes in Govt. Regulations and amendments in tax laws and other internal and external factors.

Registered Office:

By the Order of the Board

405, Patel Ashwamegh Complex Jetalpur

Tiaan Consumer Limited

Road, Near Dairy Den Circle, Sayajigunj

Vadodara 390 005

Sd/- Sd/-
Raghav Gujral Iroda Ochilova

Place: Vadodara

Managing Director Director

Date: 4th September, 2023

DIN: 09688181 DIN: 09698799