Utique Enterprises Ltd Management Discussions

OVERVIEW Global Economy

During the financial year 2023-2024, the global environment continued to be challenged by the continuing war in Europe and it was further disturbed by the ongoing conflict in the Middle East. Uncertainty around both these conflicts and their resultant impact on the supply chain routes led to volatility in the global financial and commodity markets.

The baseline forecast is for the world economy to continue growing at 3.20% during 2024 and 2025, at the same pace as in 2023. This steady growth is supported by balanced risks, declining inflation, and consistent economic expansion. Despite challenges such as Russias invasion of Ukraine and the global cost-of-living crisis, inflation rates have decreased more rapidly than anticipated since their peak in CY2022, mitigating negative impacts on employment and economic activity. This decline is attributed to favourable supply-side dynamics and the monetary tightening policies of central banks.

A slight acceleration for advanced economies where growth is expected to rise from 1.60% in 2023 to 1.70% in 2024 and 1.80% in 2025 will be offset by a modest slowdown in emerging market and developing economies from 4.30% in 2023 to 4.20% in both 2024 and 2025. Core inflation is generally projected to decline more gradually.

As inflation decreases more rapidly than expected in most regions, a softening of monetary policy is anticipated. This change is likely to spur a rebound in economic growth, creating a more favorable environment for investment and development.

High energy prices and inflation continued to weigh heavily on demand for manufactured goods, resulting in a 1.20% decline in world goods trade volume for 2023. Services trade grew 9.00% in 2023 despite a decline in freight transport, thanks to recovering international travel and surging digitally delivered services.

Goods trade is forecast to grow 2.60% worldwide this year and 3.30% in 2025 as inflation falls, countering the decline seen in 2023.

After hitting a peak of 8.70% in 2022, global inflation is projected to fall to 5.90% in 2024, reflecting promising inflation trends amid resilient global growth.

Indian Economy

Despite the challenging global landscape during the year, India emerged as the fastest growing major economy, driven by a robust push in capital formation with public investment leading the path. The large domestic consumption basket in the country also supported this growth, though overall, it showed signs of moderation from the earlier years.

Reserve Bank of India (RBI) has kept its forecast for retail price inflation in 2023-2024 unchanged at 5.40%. It has brought down the estimate for the January-March 2024 quarter to 5.00% from 5.20% in the previous meeting. Assuming normal monsoon in the next fiscal, the RBI has projected inflation to close at 4.50% in fiscal year 2024-2025.

The RBI decided to keep the key policy repo rate unchanged at 6.50% for the seventh consecutive time and also projected real GDP growth rate for financial year 2025 at 7.00%.

According to the World Bank, the India economy is projected to grow at 7.50% in 2024, revising its earlier projections for the same period by 1.20%.

This is driven by resilient activity in services and industry. However, growth is expected to moderate to 6.60% over the medium term. The expected slowdown mainly reflects a deceleration in investment from its elevated pace in the previous year. Over the medium term, the fiscal deficit and government debt in India are projected to decline, supported by robust output growth and consolidation efforts by the Central Government.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Precious metals like gold and silver have seen remarkable market expansion in both exchange-traded derivatives and spot markets. The global precious metals market is projected to rise from USD 323.71 billion in 2024 to USD 501.09 billion by 2032, at a CAGR of 5.60%.

The bullion market, a critical component of this sector, continues to thrive, driven by Indias cultural affinity for gold and silver. The expanding economy and rising disposable incomes have further bolstered demand for these precious metals. This growth is further supported by the capital markets, which facilitate investments in bullion through various financial instruments like Gold Exchange-Traded Funds (ETFs) and Sovereign Gold Bonds. These instruments provide investors with easier and more secure access to gold and silver, enhancing market liquidity and stability.

The integration of advanced technologies in trading platforms and the liberalization of commodity markets will further enhance trading efficiency and transparency, solidifying Indias position as a key player in the global commodity trading landscape.

OPPORTUNITIES AND THREAT

Trading in commodities and derivatives are subject to inherent risks such as credit risk, margin risk, volatility in prices of commodities and currencies, political risk, leverage risk, operational risk such as high transaction costs, regulatory changes, interest rate risk, warehousing and storage cost, etc.

Your Company Management believes that in any market the biggest risk is not having complete understanding of the business. Therefore, your Company Management adopts focus-based approaches in trading in order to reduce the risk and create a substantial value creation for its stakeholders.

Global demand for Silver saw a fall in 2023 of 7.00% to 1,195 Moz (37,169t). The drop was mainly led by the price sensitive sectors of physical investment, jewelry and silverware while photography saw further structural losses.

In sharp contrast, the industrial sector posted another record high. Offtake from the industrial sector achieved a record high last year, rising 11.00% to 654.4 Moz (20,353t). Ongoing structural gains from green economy applications underpinned these gains, mainly the photovoltaic (PV) sector. Higher than expected PV capacity additions, combined with a faster adoption of new generation cells, raised electronics and electrical demand by a significant 20.00%. Other green- related applications, including power grid construction and automotive electrification have also contributed.

Industrial demand is forecast to rise by 9.00% this year to a new record high. Jewelry fabrication is expected to recover in 2024 by a modest 4.00%.

Global silver mine production is anticipated to fall by a marginal 0.80% to 823.5 Moz (25,613t) in 2024. Silver mine production looks set to rise from 2025, chiefly as projects come on-line, taking the global total to its highest since 2016.

Projections for 2024 see the gap between supply and demand grow by 17.00%, thanks to ongoing growth in industrial demand, a recovery in jewelry and silverware and still stagnant supply from both mine production and recycling.

During the first quarter 2024, the total global gold demand (inclusive of OTC purchases) was up 3.00% year-on-year to 1,238 tonnes, marking the strongest first quarter since 2016. Healthy investment from the OTC market, persistent central bank buying, and higher demand from Asian buyers, helped drive the gold price to a record quarterly average of USD 2,070/oz-10.00% higher year-on-year and 5.00% higher quarter-on-quarter. A number of factors are behind the recent surge including heightened geopolitical risk and ongoing macroeconomic uncertainty driving safe-haven demand for gold.

Total gold supply increased by 4.00% y/y in first quarter 2024. This was driven by strong mine production of 893t and mine production looks set to a new record in 2024.

SEGMENT-WISE/PRODUCT-WISE PERFORMANCE

At present, your Company has Silver, Gold and Copper segment/product-wise classification.

Your Company Management is optimistic on the outlook of trading in precious metals on account of improved regulatory framework, better integration of markets, developing market infrastructures and warehousing facilities.

The strategy to be implemented will focus on delivering value to its shareholders and at the same time, control inherent risks in order to ensure sustainable development of the Company and protect the interests of its stakeholders.

RISKS AND CONCERNS

Risk is an integral part of the business and we aim at delivering superior shareholder value by achieving an appropriate balance between risks and returns. Commodity Trading is subject to continuously evolving market dynamics, regulatory environment due to increasing globalization, integration of world markets, newer and more complex derivative products and transactions and an increasingly stringent regulatory framework.

Your Company Management identifies and monitors the risks on an ongoing basis and evolves processes/systems to monitor and control the same to contain the risks to minimum levels. Ongoing monitoring by our officials help in identifying risks early.

Further, your Company deals only with fixed contracts on physical delivery basis and also hedge the price fluctuation linked to these contracts.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has a robust system of accounting and administrative controls ably supported by an Internal Audit System with internal checks and controls to ensure safety and proper recording of all assets of the Company.

The internal audit plan is aligned with critical business risks and also involves reviewing and documenting key process risks. The scope and coverage of audits include ensuring operating guidelines, and the reliability of financial and operational information and adherence to statutory compliances.

The Internal Auditor of the Company reviews all the control measures on a quarterly basis and recommends improvements, wherever deemed appropriate, and reports to the Company Management.

The Audit Committee regularly reviews the audit findings. Based on their recommendations, the Company has implemented a number of control measures in both operational and accounting related areas, apart from the usual security related measures. The internal controls are designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining the accountability of the assets.

Internal Control and Audit is an important procedure and the Audit Committee of the Company has been empowered by the Board of Directors to review the adequacy of internal financial controls.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year 2023-2024, your Company continued to follow a focused-based approach in trading and focused on select precious metals commodities such as Silver.

The key financial indicators stand as follows for the financial years 2023-2024 and 2022-2023:-

Sr. No. Particulars	2023-2024	2022-2023
1. Debtors Turnover (in days)	N.A.	N.A.
2. Inventory Turnover	3.97	3.71
3. Interest Coverage Ratio	N.A.	N.A.
4. Current Ratio	40.07	38.44
5. Net Debt to Equity Ratio	N.A.	N.A.
6. Operating Profit Margin	96.32	95.88
7. Net Profit Margin	0.42	1.02
8. Net-worth ( lac)	6,973.80	6,841.05
9. Return on Net-worth	0.004	0.009

There are Silver trading operations in the Company. There are no significant changes in Trading this year as compared to previous year. The Company has a comfortable Current Ratio and operating margin. The average Inventory Turnover is at 3.71. There are no debts or debtors for the Company.

HUMAN RESOURCES

Your Company firmly reiterates its trust that our employees are the key assets of the organization. Our Human Resource Department continuously focuses on employee engagement and motivation, which further helps in achieving strategic objective of the organization.

Your Company continuously strives to provide its employees with competitive compensation packages. During the year under review, we maintained a cordial relationship with all the employees. As at March 31, 2024, your Company had 5 (five) permanent employees on its rolls.

For and on behalf of the Board	Mahesh Menon
J. R. K. Sarma	Director
Executive Director	DIN: 00164298
DIN: 00088327
Place: Mumbai
Date : May 28, 2024