univa foods ltd share price Management discussions

The Companys assessment performance for the year ended March 31, 2023, and the outlook for the current year are based on the current environment and business situation. However, unforeseen circumstances and those arising from external factors could affect the performance and the results.

1. GLOBAL ECONOMIC OUTLOOK, INDIAN ECONOMY OUTLOOK AND OVERVIEW OF MARKETS AND INDUSTRY STRUCTURE:

INDUSTRY STRUCTURE AND BUSINESS OVERVIEW:

GLOBAL ECONOMY, despite geopolitical tensions, the year 2022 commenced with a mixed outlook. While there were concerns of potential flat growth, the global economy faced unforeseen challenges such as supply chain disruptions, monetary tightening, inflation, and recessionary fears. China experienced a temporary decline in growth during the fourth quarter of 2022 due to a surge in COVID-19 cases following the relaxation of restrictions. Additionally, the global inflation rate reached 8.7% in 2022, largely driven by supply chain disruptions caused by the ongoing pandemic and the Russia-Ukraine conflict. The effects of the Russia-Ukraine conflict also had spillover effects on Europe, with the region grappling with acute energy shortages. This, coupled with the implementation of Brexit, impacted various aspects of Europe, including immigration, trade, and tourism. The UK economy experienced a slowing growth rate as a direct consequence of these factors.

The global economic landscape in 2022 was marked by a combination of both optimistic and challenging factors, requiring careful analysis and evaluation. According to the International Monetary Fund (IMF), the global economy experienced a GDP growth rate of 3.4% in 2022, which was lower compared to the previous years growth rate of 6.1%. Despite this moderation, there were notable developments in the tourism sector, with international tourist arrivals rebounding to reach 63% of pre-pandemic levels. Particularly, the Middle East and Europe exhibited robust recovery in this aspect, reflecting positive trends in the tourism industry.

INDIAN ECONOMY, The Indian economy exhibited resilience and stability amidst the global economic downturn, experiencing minimal disruptions. Notably, India emerged as the fastest growing major economy worldwide, propelled by robust growth in the infrastructure sector and sustained private consumption driven by pent-up demand. According to projections by the National Statistical Office

(NSO), Indias GDP for FY23 expanded by 7.0%, showcasing commendable growth despite a slight decline from the previous fiscal years growth of 8.7% in the aftermath of the COVID-19 pandemic. The successful implementation of various projects valued at US$ 1.3 trillion under the National Infrastructure Pipeline (NIP) and substantial government spending in other areas contributed to positive momentum in the economy.

However, it is important to acknowledge that global factors, rising input costs and disparities in the distribution of disposable income have resulted in uneven growth across sectors. Additionally, inflationary concerns prompted the Reserve Bank of India (RBI) to raise the repo rate by 250 basis points since May 2022, indicating proactive measures to address inflation. As a consequence, the cost of capital and interest rates have increased, leading to some moderation in consumer sentiment. Nonetheless, the overall trajectory of the economy remained positive, reflecting the resilience and adaptability of the Indian economy.

Furthermore, the full resumption of international flights at their maximum capacity in the repotting year. has instilled confidence in a strong recovery in both outbound and inbound tourism. The Airports Authority of India (AAI) has unveiled ambitious strategies for the expansion and modernisation of the aviation sector, allocating a targeted capital outlay of US$ 11.8 billion over the next five years. These initiatives are poised to foster additional growth and advancement in the years ahead.

INDUSTRY TRENDS:

Renewed focus on domestic tourism, the pandemic prompted a shift among domestic travellers, who began exploring local destinations and uncovering new tourist spots. Recognising this trend, the Government of India has implemented infrastructure initiatives, such as the introduction of the Vande Bharat Express. With the planned introduction of 475 semi-high-speed trains by 2027, the government aims to foster domestic tourism and facilitate the exploration of Indias diverse and captivating destinations. These measures contribute to sustaining the positive momentum and promoting the countrys tourism sector.

A preferred destination for medical tourism Indias standing as a leading medical tourism destination continues to flourish, projected to yield a revenue of US$ 13 billion in this sector by 2026. The countrys advanced medical facilities, well-regarded healthcare experts and cost-effectiveness of treatments attract patients globally.

Source: 1. Press Information Bureau 2. CBRE Indian Hospitality Sector 3. World Travel and Tourism Council

2. OPPORTUNITY & THREATS

OPPORTUNITIES:

In the Indian food services market, value for money will continue to be the order of the day as Indians are eating out and ordering-in much more at an average of 6-7 times per month per household. Indian consumers, irrespective of their economic class and the type of city they live in, are eating-out/ordering-in more. This is primarily to experiment and socialize and unwind over food. Indian consumers, though willing to spend more and more on experiential eating, are cost-conscious and look at value for money concepts, or cost-efficient functions when ordering-in.

Growing Tourism Industry: Highlight the global or regional trends in tourism, emphasizing the growth potential.

Market Expansion: Detail any plans for expanding into new markets, whether they are geographic regions or niche segments within the hospitality industry (e.g., luxury, eco-tourism, boutique hotels).

Digital Transformation: Discuss how embracing digital technologies, such as online booking platforms, mobile apps, and customer relationship management (CRM) systems, can improve customer experience and operational efficiency.

Sustainability and Eco-Tourism: If applicable, emphasize how the company can capitalize on the growing demand for sustainable and eco-friendly tourism options, which can attract a broader customer base.

Mergers and Acquisitions: Explain how potential mergers or acquisitions could open up new revenue streams, enhance market share, or improve cost-efficiency.

Collaborations and Partnerships: Explore strategic collaborations or partnerships with airlines, travel agencies, or other complementary businesses to increase bookings and customer engagement.

Customer Data Analysis: Highlight the opportunities presented by data analytics to gain insights into customer preferences, leading to personalized services and targeted marketing efforts.

THREATS:

Natural Disasters and Health Crises: Assess the vulnerability of the business to natural disasters (e.g., hurricanes, earthquakes) and health crises (e.g., pandemics) and describe contingency plans.

Regulatory Changes: Discuss the impact of evolving regulations and policies related to immigration, health and safety, or environmental standards on the business.

Competition: Analyze the competitive landscape, including the threat from new entrants, established competitors, and disruptive business models like Airbnb or other sharing economy platforms.

Cybersecurity Risks: Explain how the company is addressing cybersecurity threats, such as data breaches or ransomware attacks, which can harm customer trust and disrupt operations.

Supply Chain Disruptions: Address the vulnerability of the supply chain, particularly if the business relies on international suppliers for goods and services.

Environmental and Sustainability Concerns: Acknowledge the potential negative impact of the business on the environment and how changing consumer attitudes and regulations may pose risks.

Staffing and Talent: Discuss the challenges in recruiting and retaining skilled staff, as well as the potential impact of labor disputes or strikes.

3. CHALLENGES:

The food and Hospitality services industry remains fragmented with increasing competition. Inadequate supply chains, high fixed cost and shortage of quality manpower continues to pose challenges. Investing in building strong supply chains and improving operational efficiencies and standardization would remain the key focus areas. Standardization/scaling up in ethnic Indian cuisine is more challenging vs. Western cuisine.

Competitive Landscape: Analyze the competitive environment and the strategies of key competitors. Identify any market share shifts and how the company is positioning itself to maintain or gain market share.

Labor Shortages: Describe challenges related to hiring and retaining skilled staff, especially in positions like chefs, waitstaff, and housekeeping. Discuss the impact of labor costs on profitability.

Health and Safety Regulations: Address how health and safety regulations, such as those related to food safety, fire safety, and sanitation, impact daily operations and compliance costs.

Technology Integration: Discuss the role of technology in the industry and how the company is adapting to changing consumer preferences, such as mobile check-in, online reservations, and contactless payment methods.

Cybersecurity: Detail the measures in place to protect guest data and financial information from cyber threats, given the increasing frequency of cyberattacks in the hospitality sector. Environmental Sustainability: Explain the companys sustainability initiatives and any challenges associated with reducing its environmental footprint. This could include waste reduction, energy efficiency, and water conservation efforts.

Customer Experience: Evaluate customer satisfaction trends, guest feedback, and online reviews. Discuss strategies for improving the overall guest experience, as positive reviews and repeat business are crucial in the hospitality sector.

Real Estate and Property Costs: Explain how changes in property values, rents, and property taxes are affecting the companys bottom line, especially if the business owns or leases its properties.

Marketing and Branding: Discuss marketing challenges, such as maintaining a consistent brand image, attracting new customers, and effectively using digital marketing channels.

Pandemic Preparedness: Given the lessons from the COVID-19 pandemic, discuss the companys preparedness for future health crises, including contingency plans and risk mitigation strategies.

Capital Investment: Explain the companys capital expenditure plans, including investments in property renovations, technology upgrades, or expansion into new markets.

4. RISK MANAGEMENT:

At Univa Foods Limited, the process of risk identification is guided by the Companys objectives, external environment, and stakeholders, among others. Once the risks are identified, it devises plans outlining mitigation actions for the assigned risks. The objective of its risk management framework is to ensure that various risks are identified, measured, and mitigated and that policies, procedures and standards are established to address these risks and ensure a systematic response in the case of crystallization of such risks.

TYPES OF RISK:

FRAUD RISK:

We may face fraud risks such as identity theft, internal fraud, and cyber fraud. These risks pose the threat of financial loss and reputation loss, resulting from intentional deception or misrepresentation by individuals or entities, internally or externally.

Mitigation.

Your Company maintain a zero-tolerance policy towards fraud, actively raising awareness and implementing robust controls to prevent any occurrence.

REGULATORY RISK:

Any non-compliance with regulations could result in monetary losses and has the capability to damage the Companys reputation.

Mitigation

The Company ensures strict adherence to applicable rules and regulations owing to a strong internal control framework.

OPERATIONAL RISK:

This risk is about the failure of processes and controls in business operations, which can also have an adverse impact on the business continuity, reputation, and profitability of the Company.

Mitigation

A robust control and assurance mechanism has been implemented to identify and mitigate operational risks.

5. INFORMATION TECHNOLOGY RISK:

Your Company recognizes the susceptibility of its information technology systems to security threats such as computer viruses, ransomware and malware infection, phishing attacks, security breaches, data leakage, and website hacking, to mitigate these risks, the company installed Several security measures like firewall implementation in the office, moving to 16-digit complex passwords and have been undertaken to secure the IT Infrastructure from cyber security threats. Security tools have been implemented like a secure e-mail gateway to assist in data leak prevention.

6. FINANCIAL AND OPERATIONAL PERFORMANCE AND SEGMENT-WISE PERFORMANCE:

The Company provide Hospitality, Catering and Distribution of Different types of Food products and Services which is its core activity. The performance of the Company is as under:

The Company growth considering last years performance has been satisfactory. The Company is striving further to consolidate its position in the market. Your Company reported a total Income of Rs. 19.53/- (In Lakhs) for the Financial Year ended March 31, 2023, as against Rs. 7.24/- (In Lakhs) during the previous Financial Year. The Company recorded a net loss of Rs. (28.20) (In Lakhs) as against the net loss of Rs. (538.34)/- (In Lakhs) during the previous Financial Year.

7. INTERNAL CONTROL SYSTEMS:

The Company has laid down set of standards, processes and structure, which enables it to implement internal financial control across the Company and ensure that the same are adequate and operating effectively.

This ensures that all transactions are authorized, recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorized use or disposition. Your Company has adequate internal controls for its business processes across departments to ensure efficient operations, compliance with internal policies, applicable laws and regulations, protection of resources and assets and appropriate reporting of financial transactions.

The Company has an Internal Audit function which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. It comprises experienced professionals who conduct regular audits across the Companys operations. The Company has also appointed a firm of Chartered Accountants as Internal Auditors, who reviews the various functions of the Company thoroughly and report to the Audit Committee. During the Financial Year under review, the control mechanism and the process of testing controls were discussed with the Statutory Auditors. The Statutory Auditors have submitted their report on Internal Financial Controls which forms an integral part of this Report

The adequacy of the same has been reported by the Statutory Auditors of your Company in their report as required under the Companies (Auditors Report) Order, 2020.

Comprehensive internal audit is also carried out by an independent internal auditor to ensure Compliance and identify weaknesses in the system. and The Company had appointed M/s. M.H. Dalal CO Chartered Accountants, as Internal Auditor of the Company for the Financial Year 2022-23.

8. HUMAN RESOURCES & INDUSTRIAL RELATIONS:

The industrial relations continued to be harmonious and cordial providing an atmosphere conducive to sustenance of growth and enhancement of value for shareholders.

At Univa Foods Limited, we have well-defined policies to maintain effective human resources in the organization. These include; a. Reward & Recognition to encourage our employees to deliver at their best b. Statutory Compliance & Regulations for full-time employees, and contractual employees. c. Equal Opportunity Policy to give fair opportunities to all in the organization.

Intellectual capital is one of the key resources of the Company to ensure business sustainability and growth. The Company has an experienced and talented pool of employees who play a key role in enhancing business efficiency, devising strategies, setting up systems and evolving the business in line with its growth aspirations. The Company provides regular skill and personnel development training to enhance employee productivity.

The Company believes in meritocracy and performance is rewarded. To support fast-paced growth, the Company has been actively hiring highly competent individuals, who have strong domain knowledge. To keep up with the changing environment training is provided to all the employees on products, processes, and systems is tested periodically.

As part of Company processes, the Company follows a robust leadership potential assessment and leadership development process. These processes identify and groom leaders for the future and also enable succession planning for critical positions in the Company. The business leaders and employees in the Company are encouraged to think like entrepreneurs and create value for all stakeholders. The Company endeavors to provide a safe, conducive and productive work environment. As on March 31, 2023, the Company had five employees.

Our Company also places a strong emphasis on offering career-enhancement opportunities to its employees. With a focus on promotions, role enhancement, and job enrichment, Univa Foods Limited, ensures that individuals can continually grow and advance in their careers within the organization. This commitment to professional development shall act as a magnet for ambitious and talented individuals who are seeking an environment that nurtures their growth.

9. KEY FINANCIAL RATIOS:

Sr. No.	Particulars of Ratio	F.Y. 31.3.2023	F.Y. 31.3.2022	Explanation for change in Ratios
1.	Debtors Turnover	-	-	Not Applicable
2.	Creditors Turnover	-	-	Not Applicable
3.	Inventory Turnover	-	-	Not Applicable
4.	Debt Equity Ratio	1.72	0	Increase due to Finance cost and some Capital Expenditures
5.	Current Ratio	10.38	16.11	Increase in Cash and Cash Equivalents and
6.	Net Profit Ratio (%)	-1.45%	-	Decrease in Current Liabilities Increase in operation Costs of the Company and Finance Expenses
7.	Return on Investment (%)	-	-	-
8.	Return on Equity (%)	-1.73	-12.10	The increase in return on capital employed is due to an increase in debt return on compared to the previous year and an increase in revenue from

10. DETAILS PERTAINING TO THE NET-WORTH OF THE COMPANY.

Particulars	31.03.2023 (In Rs.)	31.03.2022 (In Rs.)	Explanation for change in Net-worth
Net-worth	16.31L	44.49L	During the year the Net-worth of the Company was reduced in comparison with the previous year. Net-worth of the Company eroded due to losses incurred by the Company during the year.

11. CAUTIONARY NOTE:

Statements in the Management Discussion and Analysis outlining the Companys This report and other statements - written and oral - that we periodically make contain forward-looking statements that set out anticipated results based on the managements plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipate, ‘estimate, ‘expects, ‘projects, ‘intends, ‘plans, ‘believes and words of similar substance in connection with any discussion of future performance. Estimates, perceptions and expectations may be forward-looking statements within the meaning of applicable laws and regulations. The actual results may differ materially from those expressed herein above due to certain factors which may be beyond the control of the Company.

We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent in our assumptions. Readers should keep this in mind. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.