Sirca Paints India Ltd:Annual Report 2023-24 Analysis

SIRCA Paints India Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History: SIRCA Paints India Ltd. was established in 2006 as a joint venture between SIRCA S.p.A. (Italy) and local Indian partners. SIRCA S.p.A. is a renowned Italian manufacturer of wood coatings.

Headquarters Location and Global Presence: The company’s headquarters are located in Gurugram, Haryana, India. While SIRCA Paints India Ltd. primarily operates within the Indian market, it leverages the global expertise and technology of its parent company, SIRCA S.p.A., which has a wider international presence.

Company Vision and Mission: To be the leading provider of high-quality wood coatings and decorative paints in the Indian market, offering innovative solutions and sustainable practices to meet the evolving needs of its customers.

Key Milestones in Their Growth Journey:

• 2006: Joint Venture established – SIRCA Paints India Ltd.
• Established a strong presence in the PU coatings market for wood finishing.
• Expanded product portfolio to include decorative paints, special effect coatings, and other related products.
• Increased manufacturing capacity to meet growing demand.

Stock Exchange Listing Details and Market Capitalization: SIRCA Paints India Ltd. is listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

Recent Financial Performance Highlights: (Requires recent financial reports for accurate details. This section should be updated regularly.) Generally, the company’s recent financials reflect growth in revenue driven by increasing demand for wood coatings and decorative paints in India.

Management Team and Leadership Structure: (Requires verification from the company’s website or official sources.) The management team typically consists of a blend of Indian and Italian professionals, leveraging local market knowledge and international expertise.

Notable Awards or Recognitions: (Requires research and verification from reliable sources.)

Their Products #

Complete Product Portfolio with Categories:

• Polyurethane (PU) Coatings: For wood furniture, doors, and other interior applications.
• Water-Based Coatings: Eco-friendly alternative to solvent-based coatings.
• UV Coatings: Provides high durability and resistance to scratches.
• Special Effect Coatings: Metallic, pearlescent, and other decorative finishes.
• Wood Stains and Primers: Preparation products for achieving desired wood color and finish.
• Decorative Paints: Interior and exterior paints for walls and other surfaces.
• Adhesives and Sealants: For wood and other materials.

Flagship or Signature Product Lines: SIRCA is known for its high-quality Polyurethane (PU) coatings for wood finishing.

Manufacturing Facilities and Production Capacity: The company has manufacturing facilities in India to cater to the domestic market.

Quality Certifications and Standards: The company maintains quality certifications relevant to the paints and coatings industry, demonstrating commitment to quality control and adherence to industry standards.

Unique Selling Propositions or Technological Advantages:

• Italian Technology: Leveraging advanced formulations and production processes from SIRCA S.p.A.
• High-Quality Products: Focus on delivering durable, aesthetically pleasing, and long-lasting coatings.
• Wide Range of Products: Offering a comprehensive portfolio to cater to diverse customer needs.

Recent Product Launches or R&D Initiatives: (Requires research and verification from reliable sources.) Generally, recent product launches would likely focus on eco-friendly coatings, specialty finishes, or products targeting specific industry segments.

Primary Customers #

Target Industries and Sectors:

• Furniture Industry: Manufacturers of wood furniture for homes, offices, and institutions.
• Interior Design and Architecture: Professionals involved in specifying and selecting coatings for interior projects.
• Construction Industry: Builders and developers using decorative paints for residential and commercial properties.
• Woodworking Industry: Carpenters, contractors, and wood finishers.

Geographic Markets (Domestic vs. International): Primarily focused on the domestic Indian market.

Major Client Segments (agricultural, industrial, residential, etc.): Predominantly focused on the furniture, woodworking, and residential sectors.

Distribution Network and Sales Channels: Distributes its products through a network of dealers, distributors, and retailers across India.

Major Competitors #

Direct Competitors in India and Globally:

• Asian Paints
• Berger Paints
• Kansai Nerolac Paints
• AkzoNobel India
• ICA India
• Sayerlack

Competitive Advantages and Disadvantages:

• Advantages: Strong brand reputation in wood coatings, access to Italian technology, focus on quality.
• Disadvantages: Higher price point compared to some domestic competitors, smaller market share in the decorative paints segment compared to larger players.

How they differentiate from competitors: Differentiates through its focus on high-quality wood coatings, leveraging Italian technology, and providing specialized solutions for the furniture and woodworking industries.

Market Positioning Strategy: Positions itself as a premium provider of high-quality wood coatings and decorative paints, catering to customers who prioritize quality, durability, and aesthetic appeal.

Future Outlook #

Expansion Plans or Growth Strategy: Growth strategies typically involve expanding the distribution network, increasing manufacturing capacity, introducing new products, and strengthening the brand’s presence in the Indian market.

Sustainability Initiatives or ESG Commitments: (Requires research and verification from reliable sources.) Likely focuses on developing eco-friendly coatings, reducing VOC emissions, and adopting sustainable manufacturing practices.

Industry Trends Affecting Their Business: Key industry trends include the increasing demand for eco-friendly coatings, the growing popularity of wood furniture, and the rising disposable incomes of Indian consumers.

Long-term Vision and Strategic Goals: To be the leading provider of high-quality wood coatings and decorative paints in India, known for its innovation, sustainability, and customer satisfaction.

Financial Analysis of Sirca Paints India Limited: Two-Year Trend Analysis #

Key Financial Metrics: Standalone Performance #

Detailed Analysis #

Sirca Paints India Limited: Financial Analysis Report FY24 #

Comparative Financial Performance (Profit & Loss) #

Sirca Paints India Limited demonstrated robust financial performance in FY24. Consolidated Revenue from Operations grew by 16.16% to ₹311.72 Crore from ₹268.34 Crore in FY23. Consolidated Profit After Tax (PAT) increased by 11.55% to ₹51.43 Crore from ₹46.11 Crore in FY23. EBITDA for FY24 stood at ₹68.68 Crore, with an EBITDA margin of 22.00%.

Standalone performance mirrored this trend, with Revenue from Operations at ₹311.72 Crore (FY23: ₹267.75 Crore) and PAT at ₹51.44 Crore (FY23: ₹46.11 Crore).

Note: EBITDA calculated as PBT + Finance Costs + Depreciation & Amortization. EBITDA for FY24 is also directly stated as ₹68.68 Crore in the “OUTPERFORMING EVERY YEAR” section. FY23 EBITDA not directly stated but can be calculated from FS.

Comparative Financial Position (Balance Sheet) #

The company’s financial position strengthened in FY24. Consolidated Total Assets increased to ₹350.93 Crore from ₹310.15 Crore in FY23. Total Equity (Shareholder’s Fund) rose to ₹308.72 Crore from ₹265.50 Crore, primarily driven by retained earnings and a bonus share issue. The company remains debt-free.

Cash Flow Analysis #

Cash Flow Analysis (FY24) #

Operating Cash Flow (OCF) #

• Standalone: Profit before tax ₹690.66 lakhs. Adjustments: depreciation & amortization ₹81.79 lakhs, expected credit loss ₹64.78 lakhs. Working capital changes: trade receivables outflow ₹138.22 lakhs, inventories outflow ₹18.73 lakhs, trade payables outflow ₹401.57 lakhs. Direct tax payments ₹177.03 lakhs. Net Cash from Operating Activities ₹300.03 lakhs.
• Consolidated: Profit before tax ₹690.59 lakhs. Adjustments similar to standalone. Working capital changes: trade receivables outflow ₹138.22 lakhs, inventories outflow ₹18.73 lakhs, trade payables outflow ₹401.57 lakhs. Direct tax payments ₹177.03 lakhs. Net Cash from Operating Activities ₹299.67 lakhs.
• Analysis: Positive OCF driven by profit before tax. Working capital changes indicate pressure due to increases in receivables/inventories and decrease in payables.

Investing Cash Flow (ICF) #

• Standalone: Purchase of fixed assets (including WIP) outflow ₹168.83 lakhs, movement in fixed deposits outflow ₹18.11 lakhs. Interest received inflow ₹28.09 lakhs. Net Cash used in Investing Activities ₹158.85 lakhs.
• Consolidated: Similar to standalone, purchase of fixed assets (including WIP) outflow ₹168.83 lakhs, movement in fixed deposits outflow ₹18.11 lakhs. Interest received inflow ₹28.09 lakhs. Net Cash used in Investing Activities ₹158.85 lakhs.
• Analysis: Negative ICF reflecting investments in fixed assets, aligning with expansion strategy.

Financing Cash Flow (FCF) #

• Standalone: Dividend paid outflow ₹82.21 lakhs. Net Cash used in Financing Activities ₹82.21 lakhs.
• Consolidated: Dividend paid outflow ₹82.21 lakhs. Net Cash used in Financing Activities ₹82.21 lakhs.
• Analysis: Financing activities return capital to shareholders via dividends. Company is debt-free.

Working Capital Management Efficiency (FY24) #

Inventory Turnover Ratio #

• Standalone: Sales ₹311.72 Crore / Average Inventory ₹9.93 Crore = approx. 31.4 times.
• Consolidated: Sales ₹311.72 Crore / Average Inventory ₹9.93 Crore = approx. 31.4 times.
• Note: COGS would be a more precise numerator.

Trade Receivables Turnover Ratio #

• Standalone: Net Credit Sales ₹311.72 Crore / Average Accounts Receivable ₹5.85 Crore = approx. 53.3 times.
• Consolidated: Net Credit Sales ₹311.72 Crore / Average Accounts Receivable ₹5.85 Crore = approx. 53.3 times.

Trade Payables Turnover Ratio #

• Standalone: Net Credit Purchases ₹15.51 Crore / Average Trade Payables ₹3.45 Crore = approx. 4.49 times.
• Consolidated: Similar calculation yields approximately 4.49 times.

Net Capital Turnover Ratio (Working Capital Turnover) #

• Standalone: Net Sales ₹311.72 Crore / Average Working Capital ₹22.50 Crore = approx. 13.85 times.

Analysis #

• Turnover ratios indicate operational activity. Increase in receivables and inventory suggests slower cash conversion. Efforts are ongoing to reduce working capital.

Capex Analysis #

• Planned CAPEX of ₹10 crores from internal accruals for new OIKOS product plants.
• “Purchase of fixed assets including WIP” of ₹1.69 Crore for FY24.
• Focus on expanding manufacturing capabilities, particularly for wall paints (OIKOS).

Dividend and Share Buyback Trends #

Dividend #

• FY24: Recommended final dividend of ₹1.50 per equity share (15% of Face Value ₹10).
• FY23: Final dividend of ₹1.5 per equity share.
• FY22: Final dividend of ₹2 per equity share.
• FY21: 2nd Final Dividend of ₹1.50 per equity share.
• Company has a Dividend Distribution Policy.

Share Buyback #

• No share buyback activities mentioned.

Analysis #

• Consistent dividend history. Proposed dividend for FY24 in line with previous year.

Debt Service Coverage #

• Company is “Debt free.”
• No short-term or long-term borrowings as of March 31, 2024, and March 31, 2023.
• Finance costs minimal.
• Analysis: Traditional debt service coverage ratios not applicable.

Liquidity Position and Cash Conversion Cycle #

Liquidity Position #

• Current Ratio (Standalone FY24): 6.80
• Current Ratio (Consolidated FY24): 6.80
• Cash and Cash Equivalents (Standalone FY24): ₹418.22 lakhs. Other Bank Balances (Fixed Deposits): ₹207.34 lakhs.
• Cash and Cash Equivalents (Consolidated FY24): ₹418.22 lakhs. Other Bank Balances (Fixed Deposits): ₹207.34 lakhs.

Cash Conversion Cycle (CCC) - approximation using FY24 Standalone data #

• Days Inventory Outstanding (DIO): approx. 114 days.
• Days Sales Outstanding (DSO): approx. 68 days.
• Days Payables Outstanding (DPO): approx. 77 days.
• CCC: approx. 105 days.

Analysis #

• High current ratio indicates strong short-term liquidity. CCC suggests 105 days to convert investments into cash.

Free Cash Flow (FCF) and FCF Yield Trends #

Free Cash Flow (FCF) Calculation for FY24 #

• Standalone FCF FY24: ₹300.03 lakhs (OCF) - ₹168.83 lakhs (Capex) = ₹131.20 lakhs.
• Consolidated FCF FY24: ₹299.67 lakhs (OCF) - ₹168.83 lakhs (Capex) = ₹130.84 lakhs.

FCF Yield Trends #

• Market capitalization or enterprise value needed to calculate FCF yield.

Analysis #

• Positive Free Cash Flow in FY24 after accounting for capital expenditures.

Sirca Paints India Limited: FY24 Financial Analysis #

Executive Summary #

Sirca Paints India Limited demonstrated robust financial performance in FY24, characterized by significant revenue growth, healthy profitability, and strategic expansion initiatives. The company maintained its leadership in North India’s premium wood coatings market while actively pursuing geographic and product diversification. Key developments include a joint venture with Oikos S.p.A. (Italy) for high-value, eco-friendly paints and the acquisition of the “Welcome” brand to bolster its thinner and reducer portfolio. Despite industry-wide challenges like raw material price volatility, Sirca is positioned for continued growth, leveraging its strong brand equity, expanding distribution network, and focus on innovation.

Revenue and Profitability Analysis #

• Revenue from Operations (Standalone/Consolidated): Achieved ₹318.62 Crore in FY24, a 16.42% increase from ₹273.68 Crore in FY23.
• EBITDA: Reported at ₹68.68 Crore in FY24, a 12% YoY growth from approximately ₹61.32 Crore in FY23.
• EBITDA Margin: Stood at 22.0% in FY24.
• Profit After Tax (PAT) (Standalone/Consolidated): Reached ₹51.44 Crore in FY24, up 11.55% from ₹46.11 Crore in FY23.
• PAT Margin: Calculated at 16.15% for FY24.
• Basic Earnings Per Share (EPS) (Standalone/Consolidated): Increased to ₹9.38 in FY24 from ₹8.41 in FY23, reflecting an 11.53% growth.

Market Position and Competitive Landscape #

Sirca Paints is a prominent player in the Indian coatings industry, positioned as one of the top 3 premium wood coatings brands nationally and the market leader in North India. The company serves as a preferred OEM vendor to 787 clients. The Indian paint and coatings market is projected to grow from USD 9.60 billion in 2024 to USD 15.04 billion by 2029 (CAGR of 9.38%). Decorative paints account for 74% of market value, with industrial paints taking the remainder. Sirca’s strength lies in wood coatings, a segment within the broader decorative and industrial categories, which is expected to grow at a CAGR of 7-8%, driven by real estate and furniture industry expansion. The company competes with other organized players and an unorganized sector, particularly in the mass-market segments. Its competitive edge is derived from its Italian brand licensing, product quality, innovation, and expanding distribution.

Product Portfolio Performance #

Sirca’s product portfolio is diversified across premium and mass-market segments:

• Sirca Brand: Premium Italian wood, metal, and glass coatings. The wall paints range under this brand expanded from 7 to

Strategic Direction #

Strategic and Management Analysis #

Long-term Strategic Goals #

Sirca Paints India Ltd. (Sirca) aims to be an industry leader in paints and coating solutions across India. Key strategic goals include:

• Market Expansion: Expanding into Eastern, Western, and Southern Indian markets.
• Export Development: Exploring export opportunities to South Asian countries.
• Product Innovation: Providing technologically advanced paint and coating solutions.
• Sustainable Growth: Achieving growth through quality, innovation, customer satisfaction, and responsible manufacturing practices.

Progress #

• Achieved revenue growth of 16.16% in FY24.
• Expanded distribution network from 555 dealers/distributors in 2019 to 2,346 in 2024.
• Increased branches and depots from 7 to 11 and Sirca Studios from 10 to 27 between 2019 and 2024.
• Operates two manufacturing facilities and a resin manufacturing line at Sonipat.
• Reported ₹311.72 Crore Revenue from Operations, ₹68.68 Crore EBITDA, and ₹51.44 Crore PAT.

Competitive Advantages and Market Positioning #

Sirca has established a strong market position, particularly in the premium wood coatings segment:

• Market Leadership: Recognized as a market leader in premium wood coatings in North India.
• Brand Portfolio: Owns or exclusively licenses reputable Italian brands. Recently acquired the “Welcome” brand.
• Product Diversification: Offers a wide spectrum of products for wood, metal, and glass, as well as wall paints and putty.
• OEM Relationships: Preferred vendor for 787 OEM clients across India.
• Distribution Network: A growing pan-India presence with 2,346 dealers/distributors, 11 branches/depots, and 27 Sirca Studios.
• Quality and Innovation Focus: Strong emphasis on high-quality products, R&D investment.
• Marketing Acumen: Effective marketing campaigns aimed at building brand equity and customer loyalty.
• Strong Management & Governance: Seasoned promoters and an expert professional team.
• Financial Strength: Debt-free company with a shareholder’s fund of ₹308.72 Crore.

Innovation Initiatives and R&D Effectiveness #

Innovation is a core strategic pillar for Sirca:

• Dedicated R&D Investment: The company invests in research and development.
• New Product Development:
  • Expanded its wall paints range from 7 to 19 products in three years.
  • Introduced eco-friendly water-based coatings and advanced formulations.
  • Developed new wood coatings.

Sirca Paints India Limited Analysis #

Financial Performance Analysis (FY24) #

• Revenue: ₹311.72 Crore (16.16% YoY increase)
• EBITDA: ₹68.68 Crore (12% growth); 22% margin
• PAT: ₹51.44 Crore (11.55% increase)
• EPS: ₹9.38 (11.55% increase)
• Debt: Debt-free balance sheet; Shareholder’s Funds at ₹308.72 Crore
• Dividend: ₹1.50 per equity share (15% of face value) recommended

Strategic Initiatives and Outlook #

Product Portfolio Expansion & Innovation #

• Wall paints range expanded from 7 to 19 products in three years.
• MOU with Oikos S.p.A (Italy):
  • Manufacture five eco-friendly emulsion products in India.
  • Joint Venture (51% Sirca, 49% Oikos) for manufacturing and sales in India.
  • Export potential to mutually agreed countries.
  • ₹10 Crore CAPEX for the new Oikos product plant.
• Acquisition of “Welcome” brand:
  • Acquired from New Wembley Products LLP for ₹20 Crore.
  • Aims to double existing revenue.
  • Expands offerings in thinners, reducers, and paint removers.
• R&D Investment: Continued investment in technologically advanced, innovative, and sustainable (low VOC, water-based) products.

Market Expansion and Distribution Network Strengthening #

• Leading position in North India premium wood coatings.
• Focus on expansion in East, West, and South Indian markets.
• Distribution Growth:
  • Dealers & Distributors increased from 555 in 2019 to 2,346 in 2024.
  • Branches & Depots from 7 to 11.
  • Sirca Studios from 10 to 27.
• Export Opportunities: Exploring opportunities to South Asian countries (Bangladesh, Nepal, Sri Lanka).

Manufacturing Capacity Augmentation #

• Two manufacturing facilities:
  • Sonipat, Haryana: Mass-market wood coatings, PU, NC, Melamine, thinners (16,000 Tonnes capacity). Resin manufacturing line.
  • NCR: Wall paints and putty (48 Lakh Litres capacity).
• Planned establishment of additional manufacturing assets.

Brand Equity and Customer Engagement #

• Focus on “impeccable elegance” and quality.
• Brands: Sirca, Unico, and Oikos.
• Marketing campaigns: “Your Italian Autograph”
• Initiatives: Jashn-e-Rang Contractor’s Meets, Sirca Parivaar 2.0 app.
• Segments: Retail (approx. 70% revenue) and OEM (approx. 30% revenue, 787 clients).

Market Position and Industry Context #

• Indian paint and coatings market projected to grow from USD 9.60 billion in 2024 to USD 15.04 billion by 2029 (9.38% CAGR).
• Drivers: Urbanization, infrastructure development, rising disposable incomes, and industrial growth.
• Decorative paints dominate the market.
• Wood coating sub-segment expected to grow at a CAGR of ~7-8%.
• Sirca is a market leader in premium wood coatings in North India and among the top 3 premium wood coatings brands nationally.
• Exclusive license for the ‘Sirca’ brand in India, Nepal, Bangladesh, and Sri Lanka.

Risk Management and Corporate Governance #

• Established risk management framework overseen by the Board.
• Committees: Risk Management, Audit.
• Identified Risks: Financial, strategic, operational, regulatory, material, safety, fraud, people, information security, credit, climate change, and commodity price fluctuations.
• Mitigation strategies: Hedging, contingency planning, robust operational mechanisms, benchmarking, supply chain management, and internal controls.
• Adequate internal financial controls reported.
• Unqualified auditor’s reports.
• Board: 8 directors (including 4 independent directors).
• Compliance with secretarial standards and listing regulations.

Operational Highlights #

• Manufacturing Capital: State-of-the-art plants in Sonipat and NCR.
• Human Capital: Team strength of 659, with a focus on employee well-being and development (Sirca Parivaar App for performance tracking).
• Distribution: Significant expansion in dealer network and Sirca Studios since 2019. ~1,330 shop boards installed.

Sirca Paints India Limited: Financial Analysis Report #

Company Overview and Strategic Positioning #

Sirca Paints India Limited (SPIL) manufactures and sells premium wood coatings and decorative paints under exclusively licensed Italian brands, including Sirca, Unico, and Oikos, alongside DuranteVivan and the acquired “Welcome” brand. The company focuses on “impeccable elegance” through high-quality, innovative, and sustainable coatings, aiming for industry leadership through technologically advanced products. Key strengths include a diverse product portfolio, effective marketing, experienced management, and robust governance.

Financial Performance (FY24) #

Sirca Paints India Limited demonstrated robust financial performance in FY24:

• Revenue from Operations: ₹311.72 Crore (16.42% year-over-year growth)
• EBITDA: ₹68.68 Crore (22% margin, 12% year-over-year growth)
• Profit After Tax (PAT): ₹51.44 Crore (11.55% year-over-year increase)
• Earnings Per Share (EPS): ₹9.38
• Shareholder’s Funds: ₹308.72 Crore (debt-free balance sheet)
• Dividend: ₹1.50 per equity share (15% of face value) recommended.

Strategic Initiatives and Developments #

SPIL has undertaken several key strategic initiatives:

1. Oikos S.p.A (Italy) MOU & Joint Venture: MOU signed for SPIL to manufacture eco-friendly emulsion products in India using Oikos technology, followed by a JV (51% SPIL: 49% Oikos) to continue manufacturing and selling in India and exporting.
2. Acquisition of “Welcome” Brand: Acquired the “Welcome” brand (thinners, reducers, and paint removers) from New Wembley Products LLP for ₹20 Crore, aiming to increase SPIL’s footprint and scale business operations.
3. Manufacturing Expansion: Operates two manufacturing facilities and is building additional assets, including a ₹10 Crore CAPEX for Oikos product manufacturing.
4. Distribution Network Enhancement: Strengthening pan-India presence, growing from 555 dealers/distributors in 2019 to 2,346 in 2024, with branches/depots increasing from 7 to 11, and Sirca Studios from 10 to 27.
5. Product Portfolio Expansion: Wall paints range expanded from 7 to 19 products in three years, with continuous R&D investment.
6. Branding and Marketing: Initiatives like “Your Italian Autograph,” TV commercials, exhibitions, contractor meets, and the Sirca Parivaar 2.0 app update aim to augment brand equity.

Industry Overview and Market Position #

The Indian paint and coatings market is projected to grow from USD 9.60 billion in 2024 to USD 15.04 billion by 2029 (CAGR of 9.38%). Sirca is a market leader in premium wood coatings in North India and among the top 3 brands nationally, serving both retail and OEM segments.

Operational Highlights #

• Manufacturing Capacity: 16,000 Tonnes (PU, NC, Melamine, and thinner products); 48 Lakh Litres (wall paints).
• Team Strength: 659 employees.
• Market Reach: 2,346 dealers & distributors, 11 branches & depots, 27 exclusive Sirca Studios, and ~1,330 shop boards.

Risk Management #

SPIL has a structured Enterprise Risk Management framework overseen by the Board and a dedicated Risk Management Committee.

Financial Analysis Report: Sirca Paints India Limited #

Auditor’s Opinion and Qualifications #

The Independent Auditors, Rajesh Kukreja & Associates, have issued an unqualified opinion on both the Standalone and Consolidated Financial Statements for the year ended March 31, 2024.

Standalone Financials #

The auditors state that the standalone financial statements give a true and fair view in conformity with Indian Accounting Standards (Ind AS) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2024, and its profit, other comprehensive income, changes in equity, and cash flows for the year ended on that date.

Consolidated Financials #

The auditors state that the consolidated financial statements give a true and fair view in conformity with Ind AS and other accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at March 31, 2024, and their consolidated profit, total comprehensive income, changes in equity, and cash flows for the year ended on that date.

Qualifications #

No qualifications were noted in either the standalone or consolidated auditor’s reports.

Key Audit Matters (KAMs) #

For both standalone and consolidated audits, the KAMs identified were:

• Revenue recognition (Note 2.4 & 28): Due to the timing of recognition based on transfer of control and revenue being a key performance measure, there’s a risk of revenue being recorded before control is transferred.
• Discounts and incentives (Note 2.4 & 28): Calculation of these expenses is voluminous, complex, and involves significant judgment, posing a risk of inaccurate recognition.

The auditors detailed procedures undertaken to address these KAMs and found them to be appropriately handled.

Key Accounting Policies and Changes #

The Company’s significant accounting policies are detailed in Note 2 of the Standalone Financial Statements. Key policies include:

Basis of Preparation #

Financial statements are prepared on an accrual and going concern basis in accordance with Ind AS. The operating cycle is 12 months.

Revenue Recognition (Ind AS 115) #

Revenue is recognized when performance obligations are satisfied by transferring promised goods/services to the customer, typically at the point of control transfer (mainly upon delivery). Revenue is measured at fair value of consideration, net of discounts, returns, and GST. Estimates for sales incentives/discounts and returns are based on accumulated experience.

Foreign Currency #

Transactions are recorded at prevailing exchange rates. Monetary items are retranslated at year-end rates, with exchange differences recognized in profit or loss.

Property, Plant and Equipment (PPE) #

Stated at cost less accumulated depreciation and impairment. Depreciation is on a written-down value basis over useful lives prescribed in Schedule II of the Companies Act, 2013.

Intangible Assets #

Carried at cost less accumulated amortization and impairment. Useful lives: Design (10 years), Computer software (5 years), Trademarks (5 years).

Financial Instruments #

Classified and measured at amortized cost, Fair Value Through Profit and Loss (FVTPL), or Fair Value Through Other Comprehensive Income (FVOCI). Trade receivables are at amortized cost using the Effective Interest Rate (EIR) method, net of Expected Credit Losses (ECL). The ECL model is applied using a simplified approach (lifetime ECL) for trade receivables.

Employee Benefits #

Defined contribution plans are expensed as incurred. Defined benefit plans (gratuity) are accounted for using the Projected Unit Credit Method, with actuarial valuations at each balance sheet date; remeasurements are recognized in OCI.

Inventories #

Valued at the lower of cost (weighted average) and net realizable value.

Leases (Ind AS 116) #

Adopted from April 1, 2019, using the modified retrospective approach (comparatives not restated). Right-of-use assets and lease liabilities are recognized.

Income Taxes #

Current tax is based on taxable profit. Deferred tax is recognized on temporary differences.

Changes in Accounting Policies #

The adoption of Ind AS 116 “Leases” from April 1, 2019, was the significant recent change, applied retrospectively with no impact on retained earnings at the date of initial application. No new significant accounting policy changes were highlighted for the financial year 2023-24.