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Global economy

Overview: The global economic growth was estimated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower. The global equities, bonds, and crypto assets reported an aggregated value drawdown of US$ 26 trillion from peak, equivalent to 26% of the global gross domestic product (GDP). In 2022, there was a concurrently unique decline in bond and equity markets. 2022 was the only year when the S&P 500 and 10-year US treasuries delivered negative returns of more than 10%.

The S&P GSCI TR(Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3495.76 in December 2022. There was a decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel, and urea realisations. Brent crude oil dropped from a peak of around US$ 120 per barrel in June 2022 to US$ 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

Regional growth (%) 2022 2021
World output 3.2 6.1
Advanced economies 2.5 5
Emerging and developing economies 3.8 6.3

Performance of major economies

United States: China: United Kingdom: Germany:
Reported GDP growth of 2.1% in 2022 compared to 5.9% in 2021 GDP growth was 3% in 2022 compared to 8.1% in 2021 GDP grew by 4.1% in 2022 compared to 7.6% in 2021 GDP grew by 1.9% in 2022 compared to 2.6% in 2021

Outlook: The global economy is projected to grow 2.1% in 2023, influenced by tighter monetary policy compounding lingering shocks from the pandemic and Russias invasion of Ukraine. Concurrently, global inflation is projected to fall marginally to 7%. Despite these challenges, there are positive elements within the global economic landscape. The largest economies like China, the US, India, Japan, the UK, and South Korea are not in a recession.

Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies. The energy shock in Europe did not result in a recession, and significant developments, including Chinas progressive departure from its strict zero-Covid policy and the resolution of the European energy crisis, fostered optimism for an improved global trade performance. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global inflation is likely to be still relatively high at 4.9% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half of the global growth (Source: IMF).

Indian economy

Overview: Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth was at 7.2% in FY2022-23, the highest among major economies. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation. (Source: IMF, World Bank)

Growth of the Indian economy

Regional growth (%) FY2019-20 FY2020-21 FY2021-22 FY2022-23
Real GDP growth (%) 3.7 -6.6% 8.7 7.2

Growth of the Indian economy quarter by quarter, FY2022-23

Q1FY2022-23 Q2FY2022-23 Q3FY2022-23 Q4FY2022-23
Real GDP growth (%) 13.1 6.3 4.4 6.1

(Source: Budget FY24; Economy Projections, RBI projections)

In FY2022-23, Indias current account deficit, a crucial indicator of the countrys balance of payments was at 2% of GDP. Indias fiscal deficit was estimated in nominal terms at 6.4% of GDP for the year ending March 31, 2023. After three consecutive years of rise, Indias foreign exchange reserves declined by around US$70 billion in 2022, amid rising inflation and interest rates. The countrys forex reserves, which stood at US$606.47 billion on 1 April, 2022, declined to US$578.44 billion on March 31, 2023. Indias currency weakened from H75.91 to a US dollar, to H82.34 as on March 31, 2023 due to a stronger dollar and a weaker current account deficit. India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63rd in 2022. The total gross goods and services tax (GST) collection for FY2022-23 was H18.10 lac Crores, an average of H1.51 lac a month and up 22% from FY2021-22, Indias monthly GST collections hit the second highest ever in March 2023 to H1.6 lac Crores. For 2022–23, the government collected H16.61 lac Crores in direct taxes, according to data from the Finance Ministry.

This amount was 17.6% more than what was collected in the previous fiscal.

Per capita income almost doubled in nine years to H172,000 during the year under review, a rise of 15.8% over the previous year. Indias GDP per capita was US$ 2,320 (March 2023), close to the magic figure of US$ 2,500 when consumption spiked across countries.

Outlook: India is expected to grow around 6-6.5% in FY2023-24. The growth could also be driven by broad-based credit expansion, better capacity utilisation and improving trade deficit. Headline and core inflation could trend down. Private sector investments could revive. According to the World Bank Indias GDP is projected to expand by 6.3% in FY2023-24, supported by domestic demand and increased public investment. Indias retail inflation rate could decline from 6.6% to 5.2% in FY2023-24. The global landscape favours India: Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP estimate of 6-6.5% and America and Europe are experiencing its highest inflation in 40 years.

Indias production-linked incentive appears to catalyse the downstream sectors. Inflation is steady. India is at the cusp of making significant investments in renewable energy and other sectors and emerging as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade.

Union Budget FY2023-24 provisions

An outlay of H5.94 lac Crores was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly H20,000 Crores was made for the PM Gati Shakti National Master Plan to catalyse the infrastructure sector. An outlay of H1.97 lac Crores was

announced for Production Linked Incentive schemes across 13 sectors. The Indian government intends to accelerate road construction in FY2023-24 by 16-21% to 12,000-12,500 km. The overall road construction project pipeline remains robust at 55,000 km across various execution stages. These realities indicate that a structural shift is underway that could strengthen Indias positioning as a long-term provider of manufactured products and its emergence as a credible global supplier of goods and services.

Indian air coolers market

The Indian air coolers market was valued at US$ 480 million+ in 2022 and is likely to double over the next five to seven years, driven by factors such as rising temperature, rise in the disposable income of middle-class families, and the ongoing process of rural electrification across the country. Also, the emergence of online sales channels and the continuous evolution in technology are expected to create lucrative growth opportunities for the Indian air coolers market.

The demand for air coolers is majorly dependent on climate. The climate in most parts of the country is hot, and the summer seasons are long, with generally summer begins in February and ending in July, and the temperature often reaching 45?C during that period. The cost of running air-coolers and the electricity consumed by them are much less than the cost of running air conditioners and the electricity consumed by air conditioners, making air coolers more affordable for consumers.

The efforts to make electricity available and accessible in each remote location of the country, coupled with the development of rural areas, are expected to catalyse the demand for air coolers across the country. In India, there are around 250–260 million households, out of which a significant percentage uses fans and air coolers during summer. Air coolers have become one of the fastest growing segments in consumer durables, and are also widely accepted across the consumer appliances arena as they are energy-saving, eco-friendly, and can cool efficiently. They offer exceptional air quality and abstain from making the air excessively dry. They do not utilise harmful cooling agents (CFC or HFC), they reduce the electricity bill by ~90% as against ACs, and air coolers costs appealingly less compared to air conditioners.

The government reforms for rural development, increased urbanisation, discretionary spending, and revised industrial norms, along with the upcoming stream of projects in the residential sector are expected to catalyse the demand for air coolers in the country in the foreseeable future. Additionally, Tower and Personal air coolers are anticipated to increase their market share in the succeeding years due to the changing consumer preferences for new and innovative products, growing e-commerce sales, and rising brand variants and stock-keeping units (SKUs). (Source: Research and Markets)

Sectorial growth drivers

Global warming: The average global temperature in 2022 stood at 1.15?C above the pre-industrial (1850–1900) levels. 2022 was the eighth consecutive year (2015–2022) when the global temperature stood at more than 1?C above the pre-industrial level, according to the World Meteorological Organisation.

Young population: More than 50% of Indias current population is below the age of 25 years, and over 65% is below the age of 35 years. The median age of the country is 28.4 years, an economically productive age compared to the global average of 30 years.

Increasing urbanisation: Indias urban population is expected to reach 675 million by 2035, driving the demand in the air-cooler market.

Non-metro markets: Over the last several decades, non-metro cities have seen the fastest growth in consumption, which has led to their emergence as promising economic growth centres.

Digital penetration: In 2022, Indias e-commerce market was expected to have reached US$ 74.8 billion, and by 2030, it is expected to reach US$ 350 billion. Rising urbanisation as well as growing internet penetration is predicted to widen the Indian e-commerce sector. The number of internet users is expected to reach 1.5 billion by 2040.

Rural development: The government strengthened electricity connectivity across all the cities and villages of India, which, in turn, boosted the electrical appliances market.

Working population: India adds 4.75 million people to its workforce each year. The proportion of the working age population in India is estimated to enhance from 61% in 2011 to 65% in 2036. A rising working population is expected to boost the growth of the air cooler segment.

Technological revolutions: Technological revolutions such as smart locks, feather-touch digital control panels, remote controls, auto swings, alarms, and other alcove characteristics have become well accepted compared to technologically outdated products of the unorganised segment.

Low penetration: The consumer durables market of India is underpenetrated compared to that of other countries, and offers headroom for growth. Electronic items, which were formerly considered luxury items, are likely to become basic necessities.

Organised retail: Organised retailers have penetrated through to tier II, III, and IV cities, which have improved their visibility. (Source: Business Standard, worldometer, knoema, Hindustan Times, Economic Times, Statista) Outlook: It is predicted that the air cooler market of India is likely to record sustainable growth owing to rural electrification, disposable incomes, and rising temperatures. The Indian air cooler market is expected to get dominated by the residential sector due to a vast percentage of the population belonging to lower and middle income groups and housing development plans being introduced by the government. The industrial and commercial segments are likely to observe a notable rise in demand due to installation/use of cooling solutions by large industry players. (Source: Research Market)

Product risk: A sudden reduction in the demand for air coolers can create a risk to the operations of the Company. Mitigation: The Company strengthened its portfolio of residential, commercial, and centralised air cooling to increase its relevance. Moreover, the rising temperature is anticipated to reinforce the demand for air cooling product.
Industry risk: A deceleration in the downstream sector might affect sales volume. Mitigation: The Company anticipates maintaining a steady growth trajectory by acquiring and implementing comprehensive air cooler solutions that cater to the needs of households, industrial facilities and commercial establishments.
Quality risk: A decrease in the quality can affect the Companys brand image negatively. Mitigation: The product of the Company is manufactured in hi-tech facilities possessed by vendors that allow the creation of quality coolers at reduced costs with the fastest turnaround time.
Distribution risk: The distribution network of the Company might not be able to widen the Companys footprint. Mitigation: The Company is expanding its footprint each year in the domestic market. The Company owns a global footprint across more than 60 countries, lowering its risk on account of one or few geographies witnessing a slowdown.
Competition risk: An increase in competition might restrict the sales volume and revenue. Mitigation: The Company manufactures innovative products due to constant investments in research and development, offering a competitive edge.

Financial overview

The Companys consolidated gross revenue stood at H1,238 Crores in FY2022-23, compared to H1,079 Crores in FY2021-22. The EBITDA of the Company (excluding exceptional items & other income) stood at H138

Crores in FY2022-23, compared to H161 Crores in the previous year. The Company registered a PAT of H116 Crores in FY2022-23 compared to H121 Crores in FY2021-22.

Key ratios

Please refer to Note no. 46 of the Standalone Financial Statements.

Information technology

The Company has taken a big leap towards process automation and digital transformation. The Company has identified areas of process automation across functions for productivity improvement. Robotic process automation is getting mature now and has been rolled out to group companies also. The SAP platform has been integrated with D2C, CRM, and other platforms for seamless functioning. Management reporting has been enabled through a business intelligence platform for what-if and predictive analyses.

Having the application hosted on the cloud and using the SAS platform, the Company has mitigated IT risks, and implemented initiatives like IT security posture audit, mobile device management, and data loss prevention for securing organisation data.

Human resource management

The Company has always viewed its people as its greatest assets. The Company became a ‘Great Place to Work, by fostering an environment of aspirational goal setting, and continuous improvement, in addition to health and safety, corporate responsibility, and enhancement of the quality of life of employees. The human resources functions revolve around values based on commitment, transparency, integrity, professionalism, and accountability. At the highest level, the Company continuously endeavours to improve upon these aspects on an ongoing basis and adopts innovative approaches for leveraging resources, converting opportunities into achievements through proper empowerment and motivation, and fostering healthy growth and development of human resources. The Company believes in an inclusive approach to employment. No discrimination is made on the basis of caste, religion, region, or gender. The Symphony employment base was ~720 as on March 31, 2023, including overseas subsidiaries. Competency-based talent identification, acquisition, and development in terms of career planning and succession planning are accorded top priority, and consistently receive management attention. Learn and Share, Knowledge Torch — an internal training platform, Online

LMS, and Altius — a leadership development program, are the learning and development platforms used for ensuring need-based training for the employees. The human resources department has collaborated with internal leaders and successfully implemented Shaabash – a reward and recognition program. Mentoring for newcomers is an initiative implemented to ensure the integration of newcomers into the Companys culture and values. All these HR interventions helped the organisation feature among Indias Best Workplaces in Manufacturing 2023 – Top 50, by Great Place to Work Institute, India.

Internal control systems and their adequacy

The Company has a proper and adequate system of internal controls in place, to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposal, and that transactions are authorised, recorded and reported correctly. The Company issues and updates documented operating procedures and authorities with adequate controls defined. Internal control is supplemented by an extensive programme of internal and external audits, and periodic review by the management. The system is designed to adequately ensure that financial and other records are reliable for preparing financial information and other data, and for maintaining accountability of assets. Further, the Company monitors Information and Technology General Controls (ITGC) on a periodic basis.

The compliance function reviews the Companys adherence to regulatory and legal requirements providing timely feedback to the management for corrective action, including minimising the design risk, if any.

The Audit Committee of the Board also reviews the performance of the audit and compliance functions and reviews the effectiveness of controls and compliance with regulatory guidelines. In the opinion of Board of Directors and the senior management, internal control systems are well placed and working in an efficient manner.

Cautionary statement

The Management Discussion and Analysis report containing your Companys objectives, projections, estimates, and expectations may constitute certain statements which are forward-looking within the meaning of applicable laws and regulations. The statements therein could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand, and pricing in the Companys principal markets, changes in the governmental regulations, tax regimes, forex markets, and economic developments within India and in the countries with which the Company conducts business, and other incidental factors.