Sharp India Ltd Management Discussions

The management presents Management Discussion and Analysis report in pursuance to Regulation 34(2) (e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended from time to time).

Outlook

As per International Monitory Fund (IMF), the global economy is projected to slow down from 3.4 % in year 2022 to 2.8 % in 2023. While the global economic outlook for advanced economies is expected to see an especially growth slowdown from 2.7% in 2022 to 1.3% in 2023. The global economy remain on track of gradual recovery after been affected by Covid-19 Pandemic.

As per world bank, The Indian economy is showing consistent growth,

In the FY 2022-2023 , the real GDP expanded at an estimated 6.9

%. The growth was underpinned by robust domestic demand, strong investment activity bolstered by governments push for investment in infrastructure and buoyant private consumption, particularly among higher income earners

Industry Structure & Development:

The consumer electronics products market is undergoing significant development, with more customer investing in their home and further thrive to look for effective and innovating options. The pandemic has change the consumer behavior and with work from home consumers have high investment in home appliances. While the opportunities are immures there are certain inherent challenges that industry needs to face.

The Indian television section is facing swift change in technology. The Television sector is expected significant growth in coming years due increasing demand and preference for full high definition TV with better image quality, audio clarity, and color resolution has raised substantially. Due to being various entities in this segment, competitions have resulted reduction in the LED TV. The demand of television section especially due to upgradation of technology, increase in number of channels at budget friendly prices, web series and other modes of advanced entertainment. Electrification in rural area has further boosted demand from rural areas The average time spent for watching television has increased over the years which again have raised demand for TVs.

The demand for Air conditioners has been increased from household customers and corporates. The expansion of infrastructure sectors like mall, hotels, the new industrial setup, retail outlets etc. has further boosted the demand for Air Conditioners. Further increase in disposable income, easy finance options, acceptance as utility product than luxury due to change in climate conditions has raised demand for AC. The work from home and de centralization of workforce shall further contribute raise in demand for Air conditioner market. With the development of e-commerce industry, the customers have more options and are attracted to online trading platforms wherein competitive prices are offered. Availability of comparison between the same, easy return and replacement policies and a professionally managed logistics with easy loan and convenient monthly installments has boosted the demand of consumer goods in Indian market.

Opportunities and Threats: Opportunities

1. India is expected to be one of the largest consumer durable market.

2. There is huge demand from rural India for consumer electronics products. Electrification further expects boost for demand of consumer electronics products.

3. Change in lifestyle of new generation and increase in e commerce business makes the consumers buy products easily and at competitive price.

Threats

1. Rapid changes in technologies & consumer preferences is making product life cycle short making the products and technology obsolete.

2. Stiff competition results in reduction of margin

Risks & Concerns:

The risk associated with the consumer electronics are:-

(a) The consumer electronic products and home appliances business is highly Competitive.

(b) There is a risk of assuming product liability, warranty and recall costs which may adversely affect results of operations condition.

(c) There is a risk of obsolescence of technology due to changes in the technology in a short time span. Keeping pace, making necessary changes and up gradations in the products along with the ever changing consumer preferences is also a challenge & concern for your company.

(d) The economic slowdown due to pandemic and challenging geopolitical situations has posed a lot uncertainty with regards to income causing lower consumers preferences.

Financial and operational performance and segment reporting:

Your Company was principally engaged in the manufacture and sale of liquid crystal display televisions (LED TVs) and Air Conditioners (AC). The financial highlights for the fiscal 2022-2023 are dealt with in the Directors Report. During the current year under review, your company has suffered a loss of Rs. 1,574.80 Lacs as against Rs. 1,470.82 Lacs in previous year. This was mainly due to absence of any orders. Following are the details of key financial ratios that registered more than 25% change during FY 2022-2023. a) The current ratio change was negative at 57.83 %. The ratio is deteriorated due to increase in current liabilities b) Debt Service coverage ratio change stood negative 14.89 % Due to reduction in losses compared to previous year. c) Trade receivable ratio change is at 100 % as there was no revenue from operations in 2021. Kindly Refer note 9 to the financial statements. d) Net capital Turnover ratio stood at 100 % as no revenue from operationsin2021 . Refernote18tothefinancial statements various options and easy e) Net Profit ratio stood at 100 % as no revenue from operations in 2021. Refer note 18 to the financial statements The net worth as at March 31, 2023 is negative Rs ( 8,203.05) as compared to previous year of Rs (6,668.54) - Company has incurred losses during the previous years and has continued to incur loss during the current financial year as there has been no sale any orders. Whereas operative and finance cost is which has resulted erosion in net worth for the financial year ended March 31, 2023. The Company continues to receive operational and financial support from its promoter and holding Company.

The Company continues to receive financial and operational support from Sharp Corporation, Japan, the majority shareholder and holding company. However, taking into consideration the current economic scenario, the revival of the operations of the Company may take longer than anticipated earlier. Your company had applied for extension of 38th Annual General Meeting (AGM). Kindly refer point no 2 of Directors Report for details on the same.

Risk Management:

The objective of risk management is to ensure that it is adequately estimated and controlled to enhance shareholder as well as stakeholders values. Risk is pertinent to virtually all business activities though in varying degrees and forms. It is the constant endeavor of the Company to identify, assess, prioritize and manage existing as well as emerging risks in a planned and cohesive manner

Internal control systems and their adequacy:

The Internal Control Structure of Company is adequate to ensure the effectiveness utilization of funds, safeguarding of assets against unauthorized use or disposition, true and fair reporting and compliance with all the applicable regulatory laws and company policies. Executing transactions with proper authorization and ensuring compliance of internal policies. The Companys internal controls are supported by an extensive program for internal audit, review by the management and documented policies, guidelines and procedures. The Company has independent Internal Auditors to conduct Internal Audit. The Internal Auditors every quarter place its report before Audit committee. Suggestions for improvement are considered and the audit committee follows up on corrective action.

The Company has related party transaction policy ensuring compliance under Companies Act, 2013 and SEBI (Listing Obligation and Disclosure

Requirement) Regulation, 2015 as amended or re-enacted from time to time and intended to ensure the proper approval and reporting of transactions between the Company. Whistle Blower policy in order to have access to management and report unethical and improper practice or behavior or wrongful conduct in the Company to Audit Committee

Chairman.

Human resources:

Your company continues to maintain a cordial and healthy atmosphere with the employees at all levels.

Your Company firmly believes that its people are its most precious asset and have been one of the major forces behind the rapid and successful growth of the organization. The company emphasis on training and development of employees at all levels. It commits itself to grow hand-in-hand with its employees, encouraging and aiding them to reach their full potential and improve their standard of living. The Company believes in building a performance driven organization characterised by Performance, Pride & Happiness. HR acting as a catalyst to achieve the goals by taking care of professional growth & aspiration of the people Industrial relations were cordial during the year under review. The total number of employees as on March 31, 2023 is

118.

CAUTIONERY STATEMENT:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be treated as ‘Forward Looking Statements within the meaning of applicable laws and regulations. Actual results might differsubstantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a down trend in consumer durable industry, significant changes in government policies, laws and political environment in

India or abroad and also exchange rate fluctuations, interest and other costs.