Tirupati Foam Ltd Management Discussions

DISCLAIMER

Readers are cautioned that this discussion and analysis contains forward looking statements that involve risks and uncertainties. The company undertakes no obligations to publicly update or revised any forward looking statements, whether as a result of new information, future events, or otherwise, Actual results, performance or achievements, risks and opportunities could differ materially from those expressed or implied in these forward looking statements.

OVERVIEW

ECONOMIC OVERVIEW GLOBAL ECONOMY

Global economies faced significant headwinds in 2022 in the wake of mounting inflationary pressures and geopolitical conflict in Europe. The sustained rise in interest rates by Central Banks to combat inflation and the ongoing geopolitical crisis in Europe are exacting a heavy toll on the economy.

The sudden surge of COVID in China dented growth prospects in 2022. However, the recent reopening has set the stage for a faster-than-anticipated recovery. Another positive aspect is the fact that global inflation is likely to fall from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024 [Source: IMF World Economic Outlook, January 2023].

Emerging market economies are projected to grow by 4.5% in 2023, compared to 1.1% for advanced economies [Source: IMF World Economic Outlook, April 2023]. The emerging markets and developing economies of the world are expected to be instrumental in accelerating global economic growth in the years ahead. In addition, certain industries, such as technology and e-commerce, have experienced significant growth during the pandemic and are expected to continue to do so in the coming years.

INDIAN ECONOMY

Notwithstanding the global gloomy outlook, Indias economic activity has been robust on the back of a conducive domestic policy environment and the Governments sustained focus on structural reforms. Owing to its strong macroeconomic fundamentals, the Indian economy is in a sweet spot to grow at 7% in FY 2022-23 [Source: NSO, second advance estimates].

A combination of rising disposable income, coupled with the easy availability of credit and lowering interest rates in the wake of a stabilising inflation trajectory will bode well for the domestic economys growth in the years ahead.

Industry Structure and Development

Indian mattress industry

There are many branded and unbranded players producing a wide range of mattresses through local distribution channels in Indias fragmented mattress market. The unorganised sector dominates the countrys mattress industry and has a major share of the Indian mattress market. Mattresses from this unorganised sector usually use cotton filler, as it is the cheapest of the many options that are now available. The changing market dynamics due to the pandemic and increased e-commerce adoption are expected to further augment the growth of the mattress market.

Further the Indian mattress market is comprised of PU Foam, Rubberised Coir, and Spring Mattresses. Consumer- driven factors such as increasing population, rising urbanisation, and improvement in institutional infrastructure are the key growth drivers for the growth of the mattress market. Branded mattress players have seen an increasing market share due to their constant efforts and investments to increase consumer awareness about premium and quality mattresses and development of retail infrastructure and marketing activities.

An increasing number of residential units is propelling the demand for mattresses all over the country. Residential consumers accounted for the bulk of the share, while the remaining was shared by institutional customers, which include hotels, hospitals and educational institutions. Among the different sizes available, king-size mattresses are the most preferred and comfort is the most crucial factor that determines their dominance in the market An increasing

number of residential units is propelling the demand for mattresses all over the country. Residential consumers accounted for the bulk of the share, while the remaining was shared by institutional customers, which include hotels, hospitals and educational institutions. Among the different sizes available, king-size mattresses are the most preferred and comfort is the most crucial factor that determines their dominance in the market.

Opportunities, Threats, Risks, Concern& Future Outlook

There is considerable scope for growth of foam industry because of increased usage of foam products in day-to-day life. However competition from importers and unorganized sector has been increasing day by day. Therefore the Indian industry will have to really strive hard to sustain against global competition as well as competition from unorganized markets. The steep competition has led to reduction in prices and increased expenses on promotional front. Therefore, the Company has to resort to an aggressive marketing campaign and thereby fetching higher volumes in the products positioned in lower and middle category segment at one hand and the higher realization from the products positioned in premium segment.

Opportunities

1. Product Differentiation

2. E-Commerce

3. Export Potential

4. Rural Market Threats

1. Transportation and warehousing

2. Raw Material Prices

3. Economic Stability

4. Counterfeit Products Segment Wise Performance

As such the Company deals only in one segment - Flexible polyurethane foams, hence there is no specific differential information pertaining to this section.

Financial Performance

The companys ability to maintain its cash flows and profits in this uncertain environment reflects hard work done by executive directors of the company and its leadership in domestic sales.

The Net Sales including other income of Rs. 10208.69 Lacs as compared to Rs. 10294.28 Lacs for the Previous Year. The Profit before Financial Cost, Tax and Depreciation was Rs. 225.87 Lacs for period under review as compared to Rs. 253.52 Lacs for the Previous Year.

The Net Profit after making the provision for Depreciation and Taxation stood at Rs. 192.97 Lacs as against Rs. 182.62 Lacs for the previous year.

Internal Control Systems and Their Adequacy

The Company has adequate Internal control systems commensurate with its size and operations to ensure orderly and efficient conduct of business while safeguarding the assets, quality, safety, procurements, finance and accounts and reducing and detecting error.

The Company also has appointed an external firm of Chartered Accountants to supplement the efficient Internal Audit.

Material Development in Human Resources and Industrial Relations Front

The Company routinely undertakes employee development activities keeping in mind the professional requirements of the employees as well as the growth of the Company.

The Industrial Relations were cordial throughout the year with no incidence of strike or lockouts.

CAUTIONARY STATEMENT

Statements in this Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic developments in the country and improvement in the state of capital markets, changes in the Government regulations, tax laws and other status and other incidental factors.

Date : 10.08.2023	By order of the Board
Place : Ahmedabad	For, Tirupati Foam Ltd.,
	Roshan P Sanghavi
	Managing Director
	(DIN:01006989)