Super Sales India Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

ECONOMY OVER VIEW:

Growth in 2023 and outlook for 2024

Global economic growth in 2023 estimated at 3.2 percent from 3.4 percent due to high borrowing costs, withdrawal of fiscal support, longer-term effects from the COVID-19 pandemic, Russias invasion of Ukraine, weak growth in productivity, increasing geo-economic tensions and high headline inflation. As per the latest projections, the global economy continues to grow at a similar pace as in 2023 during 2024 & 25 as well, the reasons being the steady decline of headline and core inflation, further strengthening of the United States economy, recovery in the Euro area from low growth in 2023 and stable growth of the emerging and developing economies through 2024 and 2025, with regional differences.

Growth of the Advance economies in 2023 estimated at 1.6 percent with the growth of United States at 2.5 percent, Euro area at 0.4 percent, Japan at 1.9 percent and other advance economies at 1.8 percent. Advanced economies growth is projected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025.

In the United States, growth is projected to increase to 2.7 percent in 2024. The US economy entered in 2024 on strong footing, but headwinds, including rising consumer debt, elevated interest rates, cooling of consumer spending, softening in labour market will weigh on economic growth.

Growth in the Euro area is projected to recover from its low rate of growth estimated 0.4 percent in 2023, which reflected relatively high exposure to the war in Ukraine, to 0.8 percent in 2024 and 1.5 percent in 2025. Stronger household consumption, as the effects of the shock to energy prices subside and a fall in inflation which may support growth in real income, is expected to drive the recovery.

In Japan, output is projected to slow from an estimated 1.9 percent in 2023 to 0.9 percent in 2024 and 1 percent in 2025 due to less domestic consumptions.

Estimated Growth of Emerging and developing economies in 2023 at 4.3 percent with Emerging and developing Asia at 5.6 percent, with China at 5.2 percent and India at 7.8 percent, and Emerging and Developing Europe at 3.2 percent.

Emerging and developing economies growth is expected to be stable at 4.2 percent in 2024 and 2025. Growth in emerging and developing Asia is expected to fall from an estimated 5.6 percent in 2023 to 5.2 percent in 2024 and 4.9 percent in 2025. Growth in China is projected to slow from 5.2 percent in 2023 to 4.6 percent in 2024 and 4.1 percent in 2025 due to withdrawal of boost to consumption, fiscal stimulus and weakness in the property sector persists.

Growth in India is projected to remain strong at 6.8 percent in 2024 and 6.5 percent in 2025, with the robustness reflecting continuing strength in domestic demand and a rising working-age population.

Continuity of Policy relating to Capital spending and focus on infrastructure development by the Government after the general election, strong manufacturing activity, pick up of private industrial capital spending based on the projects sanctioned by major banks and financial institutions, rising capacity utilization, robust credit growth and upbeat business sentiment, ongoing supply chain diversification benefits and investors response to the governments production-linked incentive (PLI) scheme to boost key manufacturing industries, rising auto sales, consumer optimism and double-digit credit growth suggest gaining to economic momentum.

However, the constraints on production factors (both labour and capital), countrys lack of integration into global trade based on drop in FDI flows, Indias Inflation concerns, shift in consumer spending pattern, high household liabilities, rain levels in the 2023 monsoon season were 6.5% lower than normal across the entire country due to El Nino, risk relates to monetary policy against the backdrop of re-emerging inflationary pressure and international environment, geopolitical risks may lead to downward revision of economic growth.

OPPORTUNITIES AND THREATS:

Opportunities:

1. Positive sign of textile and apparel segments products demand.

2. Adoption of China plus one strategy by other countries.

3. Availability of raw material.

4. Expectation of continuation of modernization programmes.

5. Establishment of new products and avenues for Gears and Gears Boxes.

Threats:

1. High attrition and availability of skilled labour force.

2. Inconsistency in power supply.

3. Volatility in yarn selling prices.

4. Quicker deliveries at lower cost by competitors.

SEGMENT WISE PERFORMANCE:

Agency Division

Though the textile market is slow during the year under review, some customers who booked orders in earlier years have taken delivery of the machines because of the readiness of the infrastructures, has helped the division to show better performance.

The division has earned a total revenue of Rs. 3242.77 Lakhs as against Rs. 2931.15 Lakhs and a PBT of Rs. 2048.84 Lakhs as against Rs. 1842.71 Lakhs.

Textile Division

Import of fabric and yarn, change in the consumption pattern, mismatch the raw material and selling prices and increase in the cost of production have affected the margin of this division.

This division earned revenue of Rs. 30422.45 Lakhs, compared to Rs. 26057.20 Lakhs to the previous year.

This division has earned a profit of Rs. 4.02 Lakhs (including an exceptional income of Rs. 211.38 Lakhs) as against the profit of Rs. 206.11 Lakhs in the previous year.

Engineering Division

Better off take of the existing products by the OEMs and introduction of new products have helped the division to post a better performance during the year under review.

This division earned a total revenue of Rs. 9099.45 Lakhs, compared to Rs. 8391.64 Lakhs of the previous year.

This Division earned a PBT of Rs. 1348.89 Lakhs as against Rs. 1858.74 Lakhs (including an exceptional income of Rs. 420.25 Lakhs).

EXPORTS

In textiles, since sheeting order from export market was good, your company exported yarn for Rs. 6492.84 Lakhs out of which Rs. 2434.71 Lakhs were merchant export. In Gears unit export during the year was Rs. 141.64 Lakhs.

PROSPECTS

As the predictions are positive in the textile and apparel segment, foreseeing a good demand for our yarn, ease out of cotton prices due to higher area of cultivation and higher yield, the textile division may show a positive performance.

Expectation of the continuation of modernization programmes by the customers due to quality requirements of weaving and knitting segments coupled with expectation of higher demand, performance of agency division will improve.

Newly developed products, direct marketing measures, establishment of custom built gear boxes will help to show better turnover in gears unit.

RISK AND CONCERN:

Consistency in availability of quality cotton, impact of import of fabric and yarn, export of cotton, incentives offered by other states, extension of the benefit of least developing country to Bangladesh are cause of concern for the demand and margin.

INTERNAL CONTROL SYSTEM AND ADEQUACY:

The Company has an adequate internal control system commensurate with its size and nature of its business. Management has overall responsibility for the Companys internal control system to safeguard the assets and to ensure reliability of financial records.

The Company has a detailed budgetary control system and the actual performance is reviewed periodically and decision taken accordingly.

Internal audit programme covers all areas of activities and periodical reports are submitted to the Management. Audit Committee reviews all financial statements and ensures adequacy of internal control systems. The Company has a well-defined organization structure, authority levels and internal rules and guidelines for conducting business transactions.

FINANCIAL PERFORMANCE AND ANALYSIS:

				(Rs. in Lakhs)
Particulars	2023-24	2022-23	Change	Percentage (%)
Income from Operations	41918.39	36779.85	5138.54	13.97
Other Income	1082.49	691.93	390.56	56.45
Profit before Interest & Depreciation	5297.02	5328.94	(31.92)	(0.60)
Interest	732.56	432.19	300.37	69.50
Profit before Depreciation	4564.46	4896.75	(332.29)	(6.79)
Less: Depreciation	2213.95	1911.05	302.90	15.85
Profit before Tax and exceptional item	2350.51	2985.70	(635.19)	(21.27)
Profit after Tax	1986.72	2836.80	(850.08)	(29.97)

HUMAN RESOURCES:

The Companys HR objectives aim to develop and train each individual to perform to his/her fullest capacity, achieving individual excellence and Companys Goals. The shortage of man power in the Textile division has become a severe problem and efforts have been taken to mitigate the same. The number of permanent people employed was 1236.

CAUTION:

Statements in the management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be considered as "forward looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. The factors that might influence the operations of the Company are demand-supply conditions, finished goods prices, raw material costs & availability, change in the government regulations, WTO and natural calamities over which the Company has no control.

The Company assumes no responsibility in respect of the forward-looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.

	For and on behalf of the Board
	SANJAY JAYAVARTHANAVELU
Coimbatore	Chairman
29th May, 2024	DIN 00004505