Garnet International Ltd Management Discussions

Global Markets

Global economic growth is estimated to have slumped to 3.4% in 2022, due to tight monetary policy by central banks globally to control the inflation caused by Russia-Ukraine war, which has disrupted supply chain and led to steep surge in commodity and fuel cost triggering energy crisis in Europe and hampered economic activity. Further the rise of new omicron variant caused new lockdowns and travel restrictions in some countries including China which imposed more frequent lockdown under its zero Covid policy and along with stress in the real estate market, has weakened economic growth in China. All these factors had a negative impact on economic growth, which slowed down to 3.4% in 2022 from 6.1% in 2021. According to IMF, global growth is projected to decelerate to 2.9% in 2023 on the back of high and persistent inflation, diminishing policy support, and elevated financial and geopolitical uncertainties.

Further aggressive monetary tightening by US Fed weighed on investment and economic activity and led to decline in business confidence. Global trade remains largely subdued due to global supply chain disruptions and bottlenecks in international freight movement along with weakening external demand. Further, the turbulence in global financial markets has ensued uncertainty in gold prices and has once again made it a safe heaven. With growing demand for gold from central banks, gold prices are testing previous highs around the level of USD 2,000/ounce. The "de-dollarization" strategy being adopted by central banks has led to this incremental demand.

Indian Markets & Economy

Geopolitical conflict between Russia and Ukraine disrupted supply chain and resulted in high food and energy prices. However, the Indian economy remained remarkably resilient to external environment owing to ongoing policy reforms and prudent regulatory measures which ensured strong macroeconomic fundamentals and helped the country navigate global and domestic challenges. The services sector supported growth while manufacturing sector was impacted due to elevated input prices and uneven demand recovery. Higher government spending on infrastructure sector supported investment growth during the year. However, monetary tightening by the RBI, widening of current account deficits and decline in growth of exports capped economic growth prospects.

The growth in the Indian economy is expected to slightly decline to 6.1% in FY24 led by decrease in consumer demand, confidence and business due to rising interest rates. However, growth is expected to pick up in the second half of the fiscal year with revival in manufacturing and trade activity and pick up in credit and investment cycle. The governments initiatives such as PM Gati Shakti, the National Logistics Policy, and the PLI scheme are expected to support economic growth. However, the government must address challenges such as inflationary pressures and promote private investment and growth. Overall, Indias economic outlook remains positive, and the governments proactive measures are expected to support growth in the coming years.

In India, corporate and the services sector has not been substantially negatively impacted due to ongoing geo-political tensions. Even so, the year FY 2022-23 recorded a lower earnings growth for the Nifty 50 companies than what was estimated by analysts at the beginning of the financial year. The Nifty 50 recorded an approximate fall of 2.5%, but showed impressive resilience given the global circumstances & food grain distribution. The world remains behest with nations expressing differences which could escalate further. In the month of April 2023, China initiated naval and air exercises close to Taiwan. The year will be a test for the western world to manage political tensions and economic disruptions. Another geo-political crisis or escalation of the Russian-Ukraine war could be disastrous for the world at large.

Risks and Concerns

The very nature of the Companys business makes it subject to various kinds of risks. The Company encounters credit risk and operational risks in its daily business operations. Further the performance of the Company is dependent on the capital markets for its returns. Even though it is envisaged that Indian stock market will continue to do well, global concerns can result in sharp corrections.

Financial Performance and Operational Review

The paid up equity share capital of the Company as on March 31, 2023 stands at Rs. 19,63,50,000/- divided into 1,96,35,000 fully paid up equity shares of Rs. 10/- each.

Net Worth

The Net Worth of the Company stands at Rs. 2655.39 lakhs.

Total Income

During the year total income was reported at Rs. 2161.57 lakhs.

Credit Facilities

The Company has not availed any credit facility. It has consistently been able to meet its financial needs through internal accruals.

Finance Cost

The finance cost of the Company stands at Nil

Tax Expense

The Company has incurred a tax expense of Nil in the current year.