Dangee Dums Ltd:Annual Report 2023-24 Analysis

Dangee Dums Ltd. - A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

While specific founding history details are not publicly available without official company statements, Dangee Dums is a well-established bakery and confectionery chain in India.

Headquarters Location and Global Presence:

Dangee Dums primarily operates in India. Specific information regarding a global presence beyond India requires further research.

Company Vision and Mission:

Without official statements, the inferred vision is to be a leading bakery and confectionery brand in India, known for quality, taste, and innovation. The mission likely involves providing customers with delightful and memorable experiences through their products.

Key Milestones in Their Growth Journey:

• Significant expansion of their bakery and confectionery chain across multiple cities in India.
• Development of a diverse product portfolio catering to various tastes and occasions.
• Establishment of a strong brand presence through marketing and customer engagement initiatives.

Management Team and Leadership Structure:

Information about the specific management team and leadership structure requires direct access to company information.

Their Products #

Complete Product Portfolio with Categories:

Dangee Dums offers a wide range of bakery and confectionery products, including:

• Cakes (birthday cakes, celebration cakes, themed cakes)
• Pastries (various flavors and types)
• Cookies
• Breads
• Desserts (mousse, puddings, tarts)
• Chocolates
• Savories (sandwiches, puffs, rolls)
• Customized and personalized baked goods

Flagship or Signature Product Lines:

Specific flagship product lines would require deeper knowledge, but popular items might include signature cakes or desserts known for their unique recipes or flavor combinations.

Quality Certifications and Standards:

Dangee Dums likely adheres to food safety and hygiene standards. Specific certifications (e.g., FSSAI) would need verification.

Any Unique Selling Propositions or Technological Advantages:

Their USPs likely revolve around fresh ingredients, unique recipes, customized cake options, and potentially, a strong local brand presence.

Primary Customers #

Geographic Markets (domestic vs. international):

Primarily focused on the domestic market in India.

Major Client Segments:

• Individual consumers (for personal consumption and celebrations)
• Corporate clients (for events and gifting)
• Event organizers
• Cafes and restaurants (potentially as suppliers)

Distribution Network and Sales Channels:

• Directly owned bakery outlets
• Franchise outlets
• Online ordering platform (website or app)
• Partnerships with food delivery services (e.g., Swiggy, Zomato)
• Potential wholesale distribution to cafes or retailers

Major Competitors #

Direct Competitors in India and Globally:

• Direct Competitors in India: Monginis, Mio Amore, Theobroma, Ribbons and Balloons, and other local and regional bakery chains.
• Global Competitors (indirectly): International bakery and confectionery brands with a presence in India.

Competitive Advantages and Disadvantages:

• Potential Advantages: Strong local brand recognition in specific regions, customized cake offerings, a wide product range, and a convenient distribution network.
• Potential Disadvantages: Intense competition, price sensitivity in the Indian market, the need to maintain consistent quality across all outlets.

How they differentiate from competitors:

Differentiation strategies likely include a focus on unique recipes, superior quality ingredients, customized cake design, and a strong emphasis on customer service and experience.

Future Outlook #

Expansion plans or growth strategy:

• Geographic expansion into new cities and regions within India.
• Menu innovation and product development to cater to evolving consumer tastes.
• Strengthening their online presence and delivery capabilities.
• Franchise expansion to increase their reach.

Sustainability initiatives or ESG commitments:

Specific information regarding sustainability initiatives requires further research.

Dangee Dums Limited: Financial Analysis FY 2023-24 #

Comprehensive Performance Overview #

Financial Trend Analysis (FY23-FY24) #

Revenue #

Declined by 14.01% from INR 2,905.46 Lakhs in FY23 to INR 2,498.34 Lakhs in FY24. Total income decreased similarly by 13.32%.

Profitability #

The company reported an increased loss before tax (PBT) of INR 88.04 Lakhs in FY24, compared to a loss of INR 61.60 Lakhs in FY23. Net Loss After Tax (PAT) mirrored this trend.

Earnings Per Share (EPS) #

Basic and Diluted EPS worsened from (INR 0.04) in FY23 to (INR 0.06) in FY24.

Key Ratios (Significant Changes >25%) #

Debt-Equity Ratio #

Improved significantly, decreasing by 32.88% from 0.73 in FY23 to 0.49 in FY24, attributed to debt repayment.

Net Profit Margin #

Deteriorated, moving from (2.46)% in FY23 to (3.53)% in FY24, reflecting reduced profitability relative to sales.

Return on Net Worth #

Declined from (3.61)% in FY23 to (5.26)% in FY24, indicating a worsening return on shareholders’ equity due to increased losses.

Cash Flow #

Despite the increased net loss, Net Cash Flow from Operating Activities improved from INR 143.60 Lakhs in FY23 to INR 253.77 Lakhs in FY24.

Detailed Analysis #

Financial Analysis: Dangee Dums Limited (FY2023-24) #

Comparative Financial Analysis (2-Year) #

Note: Analysis covers FY2024 and FY2023.

Condensed Balance Sheet Summary #

Condensed Profit & Loss Summary #

Dangee Dums Limited - Financial Analysis FY 2023-24 #

Revenue Analysis #

Revenue from operations decreased by 3.08% to Rs. 2,605.94 Lakhs in FY 2023-24 from Rs. 2,688.88 Lakhs in FY 2022-23. Total income also decreased from Rs. 2,719.75 Lakhs to Rs. 2,623.40 Lakhs.

Cost Structure Analysis #

The cost structure remained relatively stable for major components like materials and employee benefits as a percentage of total income. ‘Other Expenses’ saw a notable increase as a percentage of total income. Total expenses slightly decreased in absolute terms from Rs. 2,732.67 Lakhs to Rs. 2,705.44 Lakhs but increased relative to the decreased total income.

Major Cost Components (as % of Total Income FY24 vs FY23):

• Cost of Materials Consumed: 33.18% vs 33.20%
• Purchases of Stock-in-Trade: 15.71% vs 15.75%
• Changes in Inventories: -2.45% vs -2.74% (Indicating an increase in finished goods/WIP)
• Employee Benefits Expense: 20.47% vs 20.71%
• Depreciation & Amortization: 16.66% vs 16.40%
• Finance Costs: 5.26% vs 5.58%
• Other Expenses: 11.09% vs 8.85%

Profitability and Margin Analysis #

Gross Profit Margin #

• FY 2024: 53.25%
• FY 2023: 53.27%

Gross margin remained stable.

Operating Profit (EBIT) Margin #

• FY 2024: 1.92% (EBIT: Rs. 50.07 Lakhs)
• FY 2023: 4.24% (EBIT: Rs. 114.00 Lakhs)

Operating margin significantly declined, driven by the decrease in revenue and relative increase in operating expenses, despite lower finance costs.

Net Profit Margin #

• FY 2024: -3.38% (Net Loss: Rs. 88.04 Lakhs)
• FY 2023: -1.58% (Net Loss: Rs. 42.58 Lakhs)

The company reported a higher net loss in FY24 compared to FY23. This was primarily due to lower operating profit and the absence of the deferred tax credit benefit seen in FY23.

Operating Leverage #

The Degree of Operating Leverage (DOL) was approximately 18.21 (-56.08% / -3.08%).

The high positive DOL indicates significant operating leverage. A small decrease in revenue (-3.08%) led to a much larger decrease in EBIT (-56.08%). This suggests a high proportion of fixed costs in the operating structure.

Non-Recurring Items #

Potential non-recurring or unusual items include:

• FY 2024: Gain on Cancellation/Modification of Lease (Rs. 8.16 Lakhs), Loss on Discard of Property Plant & Equipment (Rs. 0.14 Lakhs).
• FY 2023: Gain on Cancellation/Modification of Lease (Rs. 21.05 Lakhs), Loss on Discard of Property Plant & Equipment (Rs. 0.48 Lakhs), Profit on Sale of Non-Current Investments (Rs. 1.05 Lakhs), Loss on Fair Valuation of Non-Current Investment (Rs. 1.35 Lakhs).

Expected Credit Losses (Rs. 1.07 Lakhs in FY24 vs Rs. 0.83 Lakhs in FY23) are also noted.

Cash Flow and Liquidity Analysis of Dangee Dums Limited (FY 2023-24) #

Cash Flow Analysis (OCF, ICF, FCF Components) #

Operating Cash Flow (OCF) #

Net OCF significantly increased to INR 159.44 Lakhs in FY24 from INR 82.35 Lakhs in FY23. Despite a higher loss before tax (INR -88.04 Lakhs vs INR -61.23 Lakhs), the improvement was driven by larger positive adjustments for non-cash items (Depreciation, Finance costs) totaling INR 488.77 Lakhs (vs INR 471.21 Lakhs) and a smaller negative impact from working capital changes (INR -229.07 Lakhs vs INR -326.55 Lakhs). Cash generated from operations before tax payments was INR 171.66 Lakhs (vs INR 83.45 Lakhs).

Investing Cash Flow (ICF) #

Net ICF showed an outflow of INR 36.96 Lakhs in FY24, compared to an inflow of INR 91.79 Lakhs in FY23. Key components include higher purchases of Property, Plant & Equipment (PPE) at INR 59.02 Lakhs (vs INR 28.50 Lakhs) and a significantly smaller inflow from the decrease in Non-Current Loans (INR 18.96 Lakhs vs INR 123.50 Lakhs). Proceeds from PPE sales were minimal (INR 0.33 Lakhs vs INR 0.68 Lakhs).

Financing Cash Flow (FCF) #

Net FCF outflow increased to INR 449.54 Lakhs in FY24 from INR 394.21 Lakhs in FY23. Major outflows included repayments of long-term borrowings (INR 136.98 Lakhs), principal payments on lease liabilities (INR 119.68 Lakhs), interest on lease liabilities (INR 103.40 Lakhs), and finance costs paid (INR 84.21 Lakhs). Short-term borrowing changes resulted in a minor outflow (INR 5.27 Lakhs).

Working Capital Management Efficiency #

Efficiency metrics indicate some deterioration. The Inventory Turnover Ratio decreased from 6.78 times in FY23 to 5.41 times in FY24 (-20.25%), suggesting slower inventory movement.

The Debtor Turnover Ratio slightly decreased from 57.81 times to 55.88 times (-3.34%), indicating marginally slower collection of receivables.

The Current Ratio declined from 0.92 to 0.83, remaining below 1, pointing towards potential stress in meeting short-term obligations.

Despite increased operational losses, OCF improved due to better management of working capital changes compared to the prior year.

Capex Analysis #

Capital expenditure (Purchase of PPE including CWIP and Intangible Assets) increased to INR 59.02 Lakhs in FY24 from INR 28.50 Lakhs in FY23, as per the cash flow statement.

Additions to Gross Block of PPE were INR 97.71 Lakhs in FY24 (vs INR 32.93 Lakhs in FY23). Additions to Right-of-Use Assets were INR 50.59 Lakhs (vs INR 369.96 Lakhs).

The company operates under a single reportable segment: Manufacturing and Trading of Bakery & Confectionery Products. Therefore, capex analysis is not broken down by segment. Investments appear focused on maintaining and potentially expanding operational assets, including owned and leased properties (stores/factory).

Dividend and Share Buyback Trends #

The Board did not recommend any dividend for FY 2023-24 due to the reported loss during the financial year.

The report does not mention any share buyback activity during the year.

Debt Service Coverage #

The company’s ability to service debt appears strained. The Interest Coverage Ratio deteriorated further into negative territory, moving from (0.39) in FY23 to (0.47) in FY24. This indicates that earnings before interest and taxes were insufficient to cover interest expenses in both years.

The Debt Equity Ratio improved significantly from 0.73 to 0.49 (-33.04%), primarily due to the repayment of borrowings (long-term and lease liabilities). However, negative profitability limits debt servicing capacity.

Liquidity Position and Cash Conversion Cycle #

The company’s liquidity position weakened considerably during FY24. Cash and cash equivalents decreased sharply from INR 338.98 Lakhs at the start of the year to INR 11.92 Lakhs at year-end.

The Current Ratio remained below 1, decreasing from 0.92 to 0.83, suggesting potential difficulty in covering short-term liabilities with short-term assets.

A precise Cash Conversion Cycle cannot be calculated from the provided data. However, the decline in Inventory Turnover Ratio suggests a potential lengthening of the cycle, while the slight decrease in Debtor Turnover Ratio also contributes marginally.

Free Cash Flow (FCF) Yield Trends #

Free Cash Flow (calculated as OCF - Capex) was positive and improved in FY24.

• FCF (FY24) = 159.44 Lakhs (OCF) - 59.02 Lakhs (Capex) = INR 100.42 Lakhs
• FCF (FY23) = 82.35 Lakhs (OCF) - 28.50 Lakhs (Capex) = INR 53.85 Lakhs

The improvement in FCF despite increased net losses is attributed to stronger OCF generation, primarily from working capital management.

FCF Yield trend analysis cannot be performed as market capitalization data is not provided in the document. However, the underlying FCF generation showed improvement year-over-year.

Dangee Dums Limited: Financial Analysis Report (FY 2023-24) #

Revenue and Profitability Metrics #

• Revenue from Operations for FY 2023-24: Rs. 2,519.32 Lakhs (FY 2022-23: Rs. 2,751.36 Lakhs)
• Loss Before Tax for FY 2023-24: Rs. 88.04 Lakhs (FY 2022-23: Rs. 61.40 Lakhs)
• Net Loss After Tax for FY 2023-24: Rs. 88.04 Lakhs (FY 2022-23: Rs. 61.40 Lakhs)
• Total Comprehensive Income for FY 2023-24: Rs. 3.00 Lakhs (FY 2022-23: Rs. 4.46 Lakhs)
• Basic and Diluted Earnings Per Share (EPS) for FY 2023-24: Rs. (0.06) (FY 2022-23: Rs. (0.04))
• Net Profit Margin decreased by 43.35% in FY 2023-24 compared to FY 2022-23.
• Return on Net Worth improved by 45.94%.

Market Share and Competitive Position #

• Dangee Dums is a well-known brand in Gujarat for cakes and bakery products.
• The company faces competition from local, national, and multinational players.
• The brand has received recognition from Zomato Hyperpure and Swiggy Restaurant Awards.
• The company uses a ‘Voice of Customer’ program to assess brand perception.

Key Products/Services Performance #

• Core business: Cakes, pastries, and bakery products sold through retail stores.
• Increased sales across various categories including ice cream, ready-to-eat food, beverages, chocolates, chips, cookies, and snacks.
• CPG division produces packaged items (chocolates, cookies, khari) and enhanced ice-cream offerings.
• Introduction of affordable savory items (Veg. Puff, Jain Puff, Paneer Puff).
• Successful sandwich offerings expanded across all outlets.

Geographic Distribution and Market Penetration #

• Operates 45 Company Owned Company Operated (COCO) stores across four cities in Gujarat: Ahmedabad (38), Baroda (4), Anand (2), and Gandhinagar (1).
• Store formats: Regular Dangee Dums stores, Gourmet format, and Store in Store format.
• Distribution channels: Own retail stores, third-party food delivery platforms (Swiggy, Zomato, Bigbasket), and the company’s own website and app.
• Future plans: Exploring General Trade (GT) and Modern Trade (MT) store distribution for CPG products.

Segment-wise Capex and ROIC #

• Single reportable segment: Manufacturing and Trading of Bakery & Confectionery Products.
• Capital expenditure: Purchases of Property, Plant & Equipment (including WIP) amounted to Rs. 136.99 Lakhs in FY 2023-24 (vs. Rs. 426.74 Lakhs in FY 2022-23). Additions to Right-of-Use assets were Rs. 527.00 Lakhs.
• Return on Capital Employed (ROCE) decreased by 22.54% from 8.20% in FY 2022-23 to 6.35% in FY 2023-24.
• Return on Net Worth (RONW) improved by 45.94% (from -6.25% to -3.38%).

Operational Efficiency Metrics #

• Primarily uses a COCO model but transitioned some stores to an ‘Operator model’.
• Inventory Turnover Ratio decreased by 20.25% (from 7.68 times to 6.12 times).
• Debtor Turnover Ratio decreased slightly by 3.34% (from 122.56 times to 118.47 times).
• Interest Coverage Ratio decreased significantly by 69.56% (from 1.41 times to 0.43 times).
• Current Ratio improved by 18.85% (from 0.67 times to 0.80 times).
• Operates a 25,000 sq ft manufacturing facility in Piplaj.
• Maintains quality control standards.
• Utilizes its own fleet of refrigerated, GPS-equipped vans for logistics.
• Employs regular training for store personnel.
• Internal control systems are in place, overseen by the Board and Audit Committee, utilizing an ERP system and a risk management framework.

Growth Initiatives, Opportunities, and Challenges #

• Growth Initiatives: Expanding product range (CPG, savory items), enhancing customer satisfaction/loyalty, investing in own digital platforms, extending the Operator Model, exploring GT/MT distribution channels for CPG products, seeking opportunities for brand strength through innovation and market presence.
• Opportunities: Growing consumer demand, innovation potential, e-commerce expansion, urbanization trends, leveraging brand name.
• Threats/Challenges: Economic uncertainties, market volatility, health concerns impacting consumer choices, substitute products, intense competition, potential supply chain disruptions, regulatory changes, rising commodity prices, staff retention, cybersecurity, and the need to expand production capacity to meet market demands.

Risk Analysis Report - Dangee Dums Limited (FY 2023-24) #

Source #

Analysis based solely on provided extracts from the Dangee Dums Limited Annual Report for the Financial Year 2023-24.

Overall Risk Environment #

The company operates in a competitive and dynamic food retail industry, facing pressures from changing consumer preferences, economic fluctuations, and operational complexities inherent in food production and multi-outlet retail. The transition to an Operator model introduces new strategic and operational considerations. Financial performance showed a decline into loss-making territory, increasing financial risk.

Risk Analysis Summary #

Dangee Dums Limited - Financial Year 2023-24 Analysis #

Long-term Strategic Goals and Progress #

Dangee Dums aims to expand its product range, enhance customer satisfaction and loyalty, invest in innovation and product development, expand market presence, and pursue business excellence. Key strategic priorities include enhancing brand strength through product innovation and market presence, investing in own digital platforms while maintaining presence on third-party ones, and potentially exploring General Trade (GT) and Modern Trade (MT) distribution for Consumer Products Group (CPG) items. Sustainability is also a focus.

Progress in FY23-24 includes opening a new outlet (reaching 45 stores across 4 cities), expanding/transforming 18 stores into gourmet format and 2 into Store in Store format, launching new affordable products (puffs, sandwiches), introducing a new signature ice-cream range, and relaunching the family pack ice-cream. The transition to an “Operator Model” for store management, initiated in FY22-23, was extended into FY23-24 based on reported successful results in streamlining operations and improving financial outcomes. Despite these initiatives and achieving a turnover of Rs. 2,599.66 Lakhs, the company reported a net loss of Rs. 88.04 Lakhs, indicating significant challenges in achieving profitable growth during the year.

Competitive Advantages and Market Positioning #

Dangee Dums positions itself as a well-known name in Gujarat for quality cakes, pastries, and bakery products, aiming to democratize consumption of high-quality items. Stated competitive advantages include strong brand recognition within Gujarat, a state-of-the-art manufacturing facility (25,000 sq ft) designed for efficiency, stringent quality control processes (shelf-life, hygiene, packaging, temperature control, traceability, compliance), and its own refrigerated logistics fleet with GPS tracking. The company emphasizes its customer feedback mechanisms (in-house CRM, ‘Voice of Customer’ program) and its dedicated management team. The shift towards an Operator model is presented as an advantage offering flexibility, performance-based remuneration, and reduced costs. Its CPG division aims to leverage attractive packaging and convenient form factors.

Innovation Initiatives and R&D Effectiveness #

The company emphasizes investment in product development, reporting a surge in sales across various categories (ice cream, ready-to-eat, beverages, chocolates, etc.) as a result. Specific innovations in FY23-24 (building on FY22-23 launches) include the expansion of affordable puff and sandwich offerings across all outlets, introduction of a new signature ice-cream range, and relaunching the family pack ice-cream range with new flavors and packaging. The CPG division continues to expand with chocolates, cookies, and khari, with plans to explore further western dessert categories. R&D focuses on consumer trends, new product launches, core product renovation, healthier options, and affordability. The report cites positive reception for new launches like puffs and sandwiches. However, the overall financial loss suggests that R&D and innovation efforts have not yet translated into overall profitability.

Management’s Track Record in Execution #

Management executed store expansion, reaching 45 outlets, and continued product diversification with launches in savory and CPG categories. The strategic shift to an Operator Model for store management was implemented and extended, cited as improving financial outcomes and streamlining operations. Management actively tracks customer feedback and monitors competition. However, the company incurred a substantial net loss of Rs. 88.04 Lakhs despite achieving Rs. 2,599.66 Lakhs in revenue from operations. This indicates significant challenges in managing costs, improving margins, or successfully navigating market difficulties, impacting the overall assessment of execution effectiveness during the fiscal year. The Chairman’s message acknowledges the financial difficulties faced.

Capital Allocation Strategy #

Capital allocation appears focused on organic growth initiatives. Investments were made in expanding the store network (opening one new store, renovating/transforming 20 existing ones), product development and R&D, maintaining and operating a dedicated logistics fleet, and developing proprietary digital platforms (website/app). The Cash Flow Statement indicates capital expenditure on Property, Plant & Equipment (Rs. 110.74 Lakhs) and repayment of borrowings (Rs. 328.82 Lakhs) and lease liabilities (principal Rs. 186.17 Lakhs). Due to the net loss, no dividend was recommended, conserving capital. The Auditor’s Report notes that funds raised on a short-term basis (Rs. 23.48 Lakhs) were used for long-term purposes. The Debt-Equity ratio improved from 0.73 to 0.49, primarily due to debt repayment.

Organizational Changes and Their Impact #

There were changes in Board composition: Mr. Umang Saraf ceased to be an Independent Director upon tenure completion, and Mr. Atulkumar Patel was appointed as an Independent Director. There was also a change in Key Managerial Personnel, with Ms. Twinkle Chheda replacing Mrs. Nilam Makwana as Company Secretary & Compliance Officer. A significant operational change was the continued implementation and extension of the Operator Model for stores, replacing the previous employee-operated system. The company states this model offers advantages like flexibility, performance-based pay, enhanced marketing, improved financial outcomes, and reduced recruitment costs, contributing positively to operations and profitability, although overall company results were negative. The Internal Complaints Committee under the POSH Act was reconstituted.

ESG Framework #

Financial Performance Analysis (FY 2023-24 vs FY 2022-23) #

• Revenue: Revenue from Operations decreased slightly to ₹2,732.21 Lakhs in FY24 from ₹2,839.32 Lakhs in FY23. Total Income followed suit, declining to ₹2,749.53 Lakhs from ₹2,851.13 Lakhs.
• Expenditure: Total Expenses increased marginally to ₹2,840.57 Lakhs in FY24 compared to ₹2,831.45 Lakhs in FY23. Key components include Cost of Materials Consumed (₹882.17 Lakhs), Purchases of Stock-in-Trade (₹394.12 Lakhs), Employee Benefits Expense (₹391.05 Lakhs), Finance Costs (₹117.30 Lakhs), Depreciation and Amortization (₹279.05 Lakhs), and Other Expenses (₹764.37 Lakhs).
• Profitability: The company reported a Loss Before Tax of ₹88.04 Lakhs in FY24, a significant deterioration from the Profit Before Tax of ₹19.68 Lakhs in FY23. Consequently, the Loss After Tax stood at ₹88.04 Lakhs in FY24, compared to a Profit After Tax of ₹15.22 Lakhs in FY23.
• Earnings Per Share (EPS): Basic and Diluted EPS turned negative at ₹(0.06) in FY24 from ₹0.10 in FY23 (adjusted for share split/bonus).
• Balance Sheet:
  • Total Assets decreased to ₹3,845.23 Lakhs as of March 31, 2024, from ₹4,459.46 Lakhs as of March 31, 2023.
  • Non-Current Assets reduced to ₹3,142.88 Lakhs from ₹4,006.53 Lakhs, primarily due to decreases in Right-of-Use Assets and Non-Current Loans.
  • Current Assets decreased to ₹702.35 Lakhs from ₹1,081.11 Lakhs.
  • Total Equity remained relatively stable at ₹1,669.41 Lakhs compared to ₹1,672.41 Lakhs. Share Capital was constant at ₹1,539.75 Lakhs.
  • Total Liabilities decreased to ₹2,175.82 Lakhs from ₹2,787.05 Lakhs.
  • Non-Current Liabilities decreased significantly to ₹1,049.40 Lakhs from ₹1,720.64 Lakhs, driven by reductions in Borrowings and Lease Liabilities.
  • Current Liabilities decreased to ₹1,126.42 Lakhs from ₹1,066.41 Lakhs.
• Cash Flow:
  • Net cash flow from operating activities was ₹165.01 Lakhs in FY24, compared to ₹244.32 Lakhs in FY23.
  • Net cash flow used in investing activities was ₹(19.48) Lakhs in FY24, versus ₹(198.80) Lakhs in FY23.
  • Net cash flow from financing activities was ₹(148.70) Lakhs in FY24, compared to ₹(42.95) Lakhs in FY23, mainly due to repayment of borrowings and lease liabilities.
  • Cash and cash equivalents at year-end decreased to ₹8.42 Lakhs from ₹11.59 Lakhs.

Operational Analysis #

• Retail Footprint: The company operates 45 Company Owned Company Operated (COCO) stores across Ahmedabad (38), Baroda (4), Anand (2), and Gandhinagar (1). Expansion continued with one new outlet in Ahmedabad during FY24. 18 regular stores were expanded into a larger gourmet format, and two stores were converted to a Store-in-Store format.
• Operating Model: The company transitioned from employee-operated stores to an Operator model starting FY 2022-23 and extended it into FY 2023-24. This model involves operators managing outlets with flexible commitments and variable remuneration based on performance, aimed at streamlining operations, optimizing resources, fostering marketing creativity, improving financial outcomes, and reducing recruitment costs.
• Manufacturing & Quality: Operates a 25,000 sq. ft. manufacturing facility in Piplaj, Ahmedabad. Emphasis is placed on quality control (shelf-life, hygiene, aesthetics, packaging, temperature control, traceability, compliance) and efficient logistics using its own fleet of refrigerated, GPS-tracked vans. Zomato Hyperpure recognized the company for using pure ingredients, and Swiggy awarded it #1 Best in Cakes & Desserts in Ahmedabad.
• Product Portfolio & CPG: Focus on product development led to sales growth across categories like ice cream, ready-to-eat food, beverages, chocolates, etc. The Consumer Products Group (CPG) division produces packaged items (chocolates, cookies, khari) and relaunched ice cream ranges. New affordable savory items (puffs priced at ₹15-₹25) and expansion of sandwich offerings aim to increase customer base, particularly students. Exploration of distribution through General Trade (GT) and Modern Trade (MT) stores is underway.
• Sales Channels: Products are available through own stores, third-party platforms (Swiggy, Zomato, Bigbasket), and the company’s own website/app. Investment continues in own platforms while maintaining a third-party presence.
• Customer Engagement: Utilizes an in-house CRM team and a ‘Voice of Customer’ program to gather feedback on product quality and brand perception.
• Human Resources: Employs 176 people as of year-end. Considers HR key to objectives, focusing on talent acquisition, training, and fostering a culture of excellence and meritocracy.

Strategic & Market Analysis (MD&A Insights) #

• Industry Context: The cake/bakery industry is growing due to evolving consumer preferences (convenience, quality, health, indulgence), rising incomes, and urbanization. Key trends include innovation (healthier options, exotic flavors), technological advancements, online sales/delivery growth, and stringent food safety regulations.
• Market Outlook: Global bakery market estimated at US$536.4B (2023), projected to reach US$734.5B by 2030 (4.6% CAGR). Indian bakery market reached US$12.6B (2023), expected to hit US$29.4B by 2032 (9.6% CAGR), driven by population growth, western influence, RTE food demand, and e-commerce expansion.
• Company Strategy: Focus on expanding product range, enhancing customer satisfaction/loyalty, innovation, competitive pricing, quality, investing in manufacturing, expanding digital capabilities, and exploring new market opportunities. Sustainability is a stated core focus.
• Opportunities: Brand name, growing demand, innovation potential, e-commerce, emerging markets, urbanization/lifestyle changes.
• Threats/Risks: Health concerns, substitute products, regulatory challenges, supply chain disruptions, intense competition, economic fluctuations, food safety, market volatility, technology shifts, cybersecurity, staff retention. The Directors’ Report states minimal risk, while the MD&A lists several concerns.
• Financial Ratios Analysis:
  • Debt Equity Ratio: Improved significantly (-33.04%) from 0.73 to 0.49, attributed to debt repayment.
  • Net Profit Margin: Decreased significantly (43.35%) from -2.46% to -3.53%, reflecting reduced profitability (shift from profit to a larger loss relative to revenue).
  • Return on Net worth: Worsened significantly (45.94%) from 0.91% to -5.27%, indicating a negative return due to the net loss incurred against the equity base.

Governance and Audit Insights #

• Related Party Transactions: All transactions reported as ordinary course, arm’s length. AOC-2 details provided. Policy exists.
• Internal Controls: Management asserts adequacy of internal financial controls. Auditors issued an unqualified opinion on the adequacy and operating effectiveness of internal financial controls over financial reporting (Annexure B). ERP system used.
• Audit Opinion: Statutory auditors (J.T. Shah & Co.) issued an unqualified opinion on the standalone financial statements, confirming a true and fair view in accordance with Ind AS.
• Key Audit Matter (KAM): “Measurement of Inventories” was identified as the KAM due to its size (4.51% of total assets), nature, manufacturing process complexity, and reliance on management judgment/estimates. Audit procedures included reviewing accounting policy, testing internal controls over inventory, evaluating cost and NRV determination, analyzing NRV vs. cost, reviewing physical verification process, and performing cut-off procedures.
• Auditor Fees (FY24): Audit Services: ₹0.65 Lakhs, Other Services (Taxation): ₹0.65 Lakhs, Total: ₹1.30 Lakhs.
• Compliance: Company confirmed compliance with Corporate Governance norms (certified by PCS), Secretarial Standards. No director disqualifications reported (certified by PCS). No penalties/strictures related to capital markets in the last three years noted for FY24, though a prior year (FY23) non-compliance regarding SDD under PIT regulations was mentioned as resolved. No CSR applicability. Forex earnings/outgo were NIL.

Dangee Dums Limited - Financial Analysis Report (FY 2023-24) #

Management Guidance and Assumptions #

• Operational Model: Continued reliance on the “Operator Model” for store management into FY 2024-25. Assumes effective outlet management, sales driving, and marketing implementation by operators.
• Product Development & Sales Growth: Investment in product development (ice cream, ready-to-eat, beverages, chocolates, CPG range) to drive sales growth and entry into new categories (western desserts). Success of affordable offerings (Puffs, Sandwiches) is expected.
• Platform Strategy: Continued investment in proprietary online platforms (website/app) while maintaining presence on third-party delivery platforms.
• Financial Performance: Acknowledgment of financial loss (Rs. 88.04 Lakhs) in FY 2023-24. Strategic initiatives (Operator Model, product expansion) are expected to improve financial performance. Revenue for the year was Rs. 2,508.43 Lakhs.
• Future Focus: Expanding product range, enhancing customer satisfaction/loyalty, and pursuing business excellence through innovation and market presence expansion.

Market Growth Forecasts #

• Global Bakery Market: Estimated at US$536.4 Billion in 2023, projected to reach US$734.5 Billion by 2030 (CAGR of 4.6%).
• Indian Bakery Market: Reached US$12.6 Billion in 2023, expected to reach US$29.4 Billion by 2032 (CAGR of 9.6%).
• Economic Context: References IMF forecasts for global growth (2.5% in 2023), US growth (2.7% in 2024), China’s slowdown (5.2% in 2023 to 4.6% in 2024), and India’s continued strong growth (7.8% in 2023 to 6.8% in 2024). India’s domestic consumer market is projected to become the world’s third-largest by 2027.

Planned Strategic Initiatives #

• Operator Model Expansion: Continued rollout and reliance on the Operator Model.
• Product Portfolio Expansion: Further investment in innovation, particularly exploring additional categories within the western dessert segment for the CPG division. Enhancement and relaunch of existing products (e.g., ice cream range).
• Distribution Channel Development: Seeking opportunities to distribute CPG products through General Trade (GT) and Modern Trade (MT) stores.
• Capacity Expansion: Addressing the identified need to expand production capacity.
• Digital Platform Enhancement: Continued investment in the company’s own website and app alongside presence on third-party platforms.
• Brand Building: Focus on enhancing brand strength through product innovation and expanded market presence.
• Customer Engagement: Leveraging the in-house CRM team and ‘Voice of Customer’ program.

Capital Expenditure Plans #

• Investment required for expanding production capacity.
• Investment in developing and launching new product categories.
• Investment in enhancing proprietary digital platforms (website/app).
• Potential costs associated with entering GT/MT distribution channels.
• Past capex is evident from the expansion of 18 stores to gourmet format and 2 stores to Store-in-Store format during the year.

Efficiency Improvement Targets #

• Operator Model: A driver for improved financial outcomes, revenue boost, and reduced recruitment expenses.
• Manufacturing & Logistics: Emphasis on manufacturing facility design (minimizing time-to-delivery), own fleet of refrigerated vans with GPS, and stringent quality control processes.
• Inventory & Display Management: Use of planograms for optimal product display.
• Waste Management: Implementation of a wastage management system.

Potential Challenges and Opportunities #

• Opportunities:
  • Strong Brand Name & Image in Gujarat.
  • Growing Consumer Demand (bakery, convenience foods).
  • Innovation & Product Development potential.
  • E-commerce Expansion.
  • Emerging Markets (potential beyond Gujarat).
  • Urbanization & Changing Lifestyles.
• Threats/Challenges:
  • Financial Performance: Reported net loss of Rs. 88.04 Lakhs in FY24.
  • Intense Competition.
  • Economic Fluctuations & Market Volatility.
  • Health Concerns impacting consumer choices.
  • Supply Chain Disruptions & Food Safety/Quality Control risks.
  • Need to Expand Production Capacity.
  • Regulatory Compliance requirements.
  • Staff Management & Retention.
  • Cyber Security & Data Privacy.

Scenario Analysis and Sensitivity to Key Assumptions #

• Interest Rate Risk: A 50 basis point increase/decrease in interest rates would decrease/increase Profit Before Tax by Rs. 4.61 Lakhs.
• Price Risk (Equity Investments): No quoted equity investments at FY24 end.
• Inventory Valuation: Identified as a Key Audit Matter due to size, nature, manufacturing process complexity, and management judgment involved in determining cost and Net Realizable Value (NRV).
• Defined Benefit Obligation (Gratuity): Sensitivity analysis shows the impact of changes in actuarial assumptions (Discount Rate, Salary Growth Rate, Withdrawal Rate) on the gratuity liability.
• Financial Ratios:
  • Debt Equity Ratio improved significantly (-33.04%) due to debt repayment.
  • Net Profit Margin worsened (43.35% decrease) due to reduced profitability.
  • Return on Net Worth worsened (45.94% decrease, moving deeper into negative territory) due to the increased net loss eroding the net worth base.
• Operator Model Success: The strategy relies on the Operator Model consistently delivering superior financial results and operational efficiency.
• Market Growth Realization: The company’s growth plans assume the realization of projected strong growth in the Indian bakery market (9.6% CAGR).

Audit and Compliance #

Dangee Dums Limited - Financial Analysis Report (FY 2023-24) #

Auditor’s Opinion and Qualifications #

• The Independent Auditor, M/s. J. T. Shah & Co., issued an unmodified opinion on the Standalone Financial Statements for the year ended March 31, 2024.
• The opinion confirms that the financial statements give a true and fair view in conformity with Indian Accounting Standards (Ind AS) and the Companies Act, 2013.
• No qualifications, reservations, or adverse remarks were made in the main audit report.
• The report includes a Key Audit Matter (KAM) concerning the Measurement of Inventories, highlighting its significance due to size, nature, manufacturing process complexity, and management judgment involved. Audit procedures included reviewing accounting policy, testing internal controls, evaluating cost and Net Realizable Value (NRV) determination, testing NRV vs. cost, reviewing physical verification processes, and performing cut-off procedures.
• The Companies (Auditor’s Report) Order, 2020 (CARO) report (Annexure A) and the Report on Internal Financial Controls (IFC) over Financial Reporting (Annexure B) are attached. The IFC report also provides an unmodified opinion, stating controls were adequate and operating effectively.

Key Accounting Policies and Changes #

• The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

Key Policies: #

• Revenue Recognition: Recognized upon transfer of control of goods/services as per Ind AS 115. Sales of products recognized on delivery; Franchise fees recognized on accrual over agreement period; Loyalty points revenue recognized based on redemption/expiry.
• Property, Plant & Equipment (PPE): Stated at cost less accumulated depreciation and impairment. Depreciation is based on useful lives estimated by management (e.g., Buildings 30/60 yrs, P&M 15 yrs, Furniture 10 yrs, Vehicles 8 yrs, Office Equip/Computers 3/5 yrs).
• Intangible Assets: Primarily Computer Software, stated at cost less accumulated amortization and impairment. Amortized over useful life (3 years).
• Leases (Ind AS 116): Right-of-Use (ROU) assets recognized at commencement, measured at cost (initial lease liability + initial direct costs +/- lease payments before commencement). Lease liabilities measured at present value of lease payments. Short-term and low-value leases expensed on a straight-line basis.
• Inventories: Valued at the lower of cost and net realizable value (NRV). Cost determined using FIFO (Raw Materials, Packing, Stores, Stock-in-Trade) or Weighted Average (Finished Goods, WIP).
• Financial Instruments: Classified and measured at Amortized Cost, Fair Value Through Profit or Loss (FVTPL), or Fair Value Through Other Comprehensive Income (FVTOCI) based on business model and cash flow characteristics. Trade receivables primarily at Amortized Cost. Impairment assessed using the Expected Credit Loss (ECL) model.
• Employee Benefits: Defined contribution plans (PF) expensed as incurred. Defined benefit plan (Gratuity) liability determined using the Projected Unit Credit method based on actuarial valuations; remeasurements recognized in OCI.
• Taxes: Current tax based on taxable income; Deferred tax recognized on timing differences using the balance sheet liability method.

Changes: #

• No significant changes in accounting policies were highlighted for the financial year 2023-24. Policies appear consistent with the prior year.

Internal Control Effectiveness #

• The Independent Auditor issued an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting as of March 31, 2024 (Annexure B).
• Management Discussion & Analysis (MD&A) and Directors’ Report confirm the existence of internal control systems, including ERP, risk management framework, financial controls, SOPs, IT systems, compliance monitoring, and feedback