MANAGEMENT DISCUSSION & ANALYSIS ECONOMIC OVERVIEW: India is set to become the world's fastest-growing major economy by 2016 ahead of China, the International Monetary Fund (IMF) said in its recent latest forecast. India is expected to grow at 6.3 per cent in 2015, and 6.5 per cent in 2016 by when it is likely to cross China's projected growth rate, the IMF said in the latest update of its World Economic Outlook. Only India is anticipated to witness better growth momentum among the BRIC bloc whereas other member countries are expected to see stable growth momentum, according to Organisation for Economic Cooperation and Development (OECD). Furthermore, the new 'Make in India' initiative is expected to be a vital component in India's quest for achieving wholesome economic development. Having grown in high single digit over past, the GDP of India has slowed down and attained a modest growth in the range of 5.4 to 5.9 per cent in 2014-15 overcoming the sub-5 per cent GDP growth of past two years. For current year the monsoon and external socio-economic environment will remain a major factor, says the Economic Survey. Financial Year 2014-15 was a comeback year for the Indian Rupee on the strength of change of political guards, start of some strategic reforms required to kick start the economy, headwinds in the external world environment, slowing down of Chinese economy, expectation of robust business environment in the Indian sub-continent. Stable but weak rupee at this juncture would help grow India's economic agenda much faster. Improving interest of foreign Institutional investors and world community will boost Indian economic and industrial sentiment to grow on sustainable basis in future. Due to various fiscal and monetary initiatives taken by the Government and Reserve Bank of India (RBI), fiscal deficit and current account deficit have narrowed down. Going forward a modest recovery in the Indian economy is expected, driven by a stable Government, moderation of inflation and implementation of recently approved government policies and investment projects. India has become a promising investment destination for foreign companies looking to do business here. The launch of 'Make in India' initiative by our Prime Minister with the aim to give the Indian economy global recognition, is expected to increase the purchasing power of the common man, will spur the industrial investment and growth, which would further boost demand, and hence spur overall development, in addition to benefiting investors both Indian & foreign. INDUSTRY OVERVIEW: Indian Retail Sector Retail industry, specially, are eyeing some big bang reforms that will not only boost existing growth but also help eliminate obstacles viz inadequate physical infrastructure, inefficiencies in supply chain, complex regulatory environment, that has been disturbing the industry for long. Our Government needs to pay heed towards demands of e-commerce industry which has witnessed a phenomenally high growth in the last 3 years, making it one of the fastest growing sectors. Retail players have time and again emphasised the need for foreign capital, expertise and knowledge in inventory-based models that will take e-commerce industry to another level altogether. Focus on Improvement in technology will ensure that e-commerce continues its growth trajectory. The right push given to retail and e-commerce industry would also fuel manufacturing industry and promote Prime Minister's ambition of "Make in India", increase consumption, thereby, stimulating economy in the long run. According retail sector an 'Industry' status with specific regulator for its needs and growth requirement will pave the growth road map for this billions dollar sunrise sector. Early implementation of GST would eliminate cascading effect of taxes and remove other inefficiencies currently faced by retailers. Increase of disposable income in hands of lower/middle class consumers, would enable greater purchasing power, leading to increase in demand and growth of industry. Investment-linked incentives for setting up and operating cold storage facility are available only to specified businesses. These incentives should be extended to retail sector for promoting investment in warehousing facilities, in logistics infrastructure and technologies etc., which shall pave the way for faster delivery of goods and services at a more efficient cost by e-commerce companies. "Digital" India would prove out to be a great boon for the industry. The Indian retail industry has brsently emerged as one of the most dynamic and fast paced industries as several players have started to enter the market. It accounts for approx. over 10 per cent of the country's Gross Domestic Product (GDP) and around eight per cent of the employment in India. The country is today the fifth largest global destination in the world for retail. Several corporates, both Indian & overseas, have planned to exploit the opportunities in the Indian retail space with mammoth capital investment plans lined up for investment in next 3-5 years' time. Expansion of retail will spur the corresponding demand for commercial real estate. The Indian retail industry in the single brand segment has received Foreign Direct Investment (FDI) equity inflows to the tune of US$ 275.38 million in the period April, 2000 - January, 2015, according to the Department of Industrial Policies and Promotion (DIPP). On the whole, both organized and unorganized retail participants should work together to improve the overall retail industry and create new opportunities for themselves and their customers, to remain growing, viable and successful in the business. Clothing and fashion retailing is the second largest contributor to the Indian retail market with a share of around 8%. In the organized retail market, clothing and fashion retailing is the largest and the most penetrated segment. With the success of ecommerce the share of organized retailing is expected to take big boost on the strength of new startups. Easy availability of credit and govt's impetus to the use of 'plastic money' availability of technology in hands of masses, shall be the strong drivers of retail sector to grow. Luxury segment of the market is showing major breakout besides the growing trend in mid segment retail market. Menswear will continue to remain major market segment after women's & Kid's wear. More and more women joining the all walks of commerce and business activities will help grow and transform the future trends of women's wear in India. Branded women's wear segment shall see more players coming to the industry. The long term outlook for the industry remains to be positive on the back of rising incomes, favourable demographics, entry of foreign players and increasing urbanization. The opening up of FDI in retail & Insurance have started showing some signs of activity, new players taking interest in the sector, old getting themselves reorganized and restructured through mergers and acquisitions shall further consolidate the landscape of Indian organized retail. ORGANIZED RETAIL Business Review: Cantabil was born with the forward visionary thought of providing affordable men's wear for masses. The company has created a space in Apparel market under the brand name of "CANTABIL" "LAFANSO" " KANESTON" " BONNETTI" "KINGSWOOD" and "CROZO" Company moved up the value chain from a garment manufacturer to a retailer by launching its first exclusive brand outlet in 2000. It has a wide range of apparel designs suited for all segments including corporate, formal and casual dressings. Cantabil will continue to focus on maintaining and reinforcing the image of its existing exclusive brand outlets and also introduce its apparel to new geographical areas and assessing fashion trends, making fashion forecasts and offering products to match the global fashion movements will keep cantabil at the leadership position for times to come. As of March 31, 2014, the Cantabil brand was sold on a total floor area of approx. 132000 sq. ft., which has increased to 134796 sq. ft. as of March 31, 2015. FINANCIAL OVERVIEW: The Company Sales in the domestic market have increased during the year under review. Total revenue of the company increased to Rs. 13884.68 Lacs during the Financial Year ended March 31, 2015, as compared to Rs 11142.84 Lacs during the Financial Year 2013-14. The Company incurred a profit of Rs. 289.11 Lacs during the Financial Year ended March 31, 2015 against a loss of Rs. 910.50 Lacs during the Financial Year ended March 31, 2014. The year under review, your Company retained its position in the market. However, the Company is confident that it will improve its performance in the Financial Year 2015-16. As of today we have 148 stores sbrad across northern, southern, eastern and western parts of the country. STRENGTHS AND OPPORTUNITIES: • Brand Leadership, • Unparalleled reach, • Diversified geographical brsence, • Strong customer connect, • Focus on superior customer experience, • Increasing volumes under women's wear., • Better quality of production., • Improved efficiency of working capital management., • Improvement in cost structure would add to operating margins of the Company RISK & THREATS: • Changing consumer brference, • High fixed cost structure, • Intensifying competition, • changes in fashion trends and slow down in consumption pattern of the consumers, may adversely affect the turnover of the Company., • Government Policy on relaxing the Foreign Direct Investment limits in the Retail Sector will allow many MNC's to enter into the Indian Retail Market, which might pose as a probable risk, since the Company will be competing with the international players as well. • Government Policy on Goods and Service Tax may also affects the competition and the profitability in future. OUT LOOK The benefit of the stable Government after 3 decades has rightly evoked a "feel good" factor across industries. The demand situation within India should improve, given the fact that there is a "feel good" factor. When the benefit of an improving economy percolates and generates further investment, manufacturing, growth and employment for the demographic dividend, it should translate into even further growth in demand, which has been visible only in fits and starts for the last few years. Over the medium term, the growth in demand should become more stable and consistent. The growth of organized retail is slated to continue, which holds great promise. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACIES The Company has proper and adequate internal control procedures commensurate with the size and nature of the business. The internal control system is supplemented by extensive internal audits, regular reviews by the management and well-documented policies and guidelines to ensure reliability of financial and all other records and to brpare financial statements and other data. Moreover, your Company continuously upgrades these systems to ensure that all the assets are safeguarded and protected against any loss from unauthorized use or disposition and those transactions are authorized, recorded and reported correctly. The Company's internal systems are supplemented by an extensive programme of internal audit conducted by an external auditor periodically and reviewed by the management together with the Audit Committee of the Board. The emphasis of internal control brvails across functions and processes, covering the entire gamut of activities including finance, supply chain, sales and distribution, marketing etc. The Company is continuously upgrading its internal control systems by measuring state of controls at various locations. Controls by an Enterprise Resource Planning (ERP) system have been strengthened with help of review conducted by Internal Auditors DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: The financial statements have been brpared in accordance with the requirements of Companies Act, 2013 and applicable accounting standards issued by the Institute of Chartered Accountants of India. The details of the financial performance of the Company are appearing in the Balance Sheet, Profit & Loss Accounts and other financial statements forming part of this Annual Report. For financial highlights please refer heading 'FINANCIAL RESULTS' of Directors Report. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES The role of Human Resources continues to remain vital and strategic to the Company. Employee recruitment and management is a key focus, and processes and policies are in place to attract and retain employees of high caliber. The Company regards its human resources as amongst its most valuable assets and proactively reviews policies and processes by creating a work environment that encourages initiative, provides challenges and opportunities and recognizes the performance and potential of its employees. Attracting and retaining the best manpower available by providing high degree of motivation, training and structured compensation was the main thrust of the Human Resources Department this year. The total number of employees of the Company as on 31st March 2015 stood at 974. CAUTIONARY STATEMENT Statement in the Management discussion and Analysis describing Company's objective, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand/supply and price conditions in the domestic markets in which the Company operates changes in the Government regulations, tax laws, statute and other incidental factors. |