Dr.

CR Rajan Board Room Simulation Shareholder’s Report

Shareholder’s Report

Market 2

Group 1
DM19232 Nikita Khanna
DM19233 P V Tejaswini
DM19234 R Amritha
DM19235 Rachit Kohli

1
Dr. CR Rajan Board Room Simulation Shareholder’s Report

The last three years have witnessed rapid growth in the market and the demand in the market is also
increasing year on year. To fulfil the demand arising out of emerging of new products, we have
focused on providing the best of value to our customers. We are also planning to expand to new
products so that we can capture the demand in other categories also and provide value creation for
our shareholders.

The products that we offer are T1GE and T1LO, both the products are focused on providing value to
the customer. With T1GE we are targeting the Geeks segment and for that we more focused on high
performance and high features which is the most important requirement for this segment of the
customers & with T1LO we are targeting the Low earners segment, this segment is more focused on
low price as compared to the other product of same category. Focusing on providing the great value
for their buy, we are the market leaders in this segment and with continuous investments in R&D we
are trying to keep in pace with the market trends.

The last period was full of challenges but we have continued to perform satisfactorily, though our
total revenue declined by 4.7% to 36.77crore compared to 38.62 crore in previous period, our focus
is on improving the efficiency and implementation of sustainable strategies so that we can perform
better in coming years. Our EBITDA for the year was 6.015 crore compared to 8.12 crore for previous
year, while our PAT stood at 4.01 crore compared to 5.65 crore previous year.

During the year, key strategic development was the launch of new product targeting the High
Earners segment. This year we continued our marketing and advertising initiatives which has always
helped us for brand building and awareness among the customers.

We are actively participating in CSR activities, many initiatives such as –

Sponsoring plantation of 1,000 trees in the city, sponsoring basic amenities of 300 people,
sponsoring vocational training for 300 disabled people

Have been initiated by the company to contribute a little to the society.

When we look at the previous periods and we are able to maintain a stable growth in the market
year on year.

During period 1 as we were new in the market we were focused on making customers more aware
about our products. Availability of products could be one the challenge that we have to focus on,
being the market leader in T1LO product we have to be readily available in large quantities and at a
greater number of places so that customer can easily get the product.

During period 2, Since the standings of the company at the end of round 1 was very good in the
market and there was no unsold inventory, it was decided to increase the production of T1LO by
50000 units and T1GE by 25000 units. Our company was the market leader in T1LO and therefore
there was no compromise made on the production or price of T1LO. However, the focus for T1LO
was shifted from bulk to convenience to increase market share and improve customer loyalty.

There was a striking issue of poor product awareness among the target segment and low market
share with the product T1GE. In order to increase the market segment awareness, the advertising
budget of T1GE product was increased by $2.5 million. An investment of $5 million was made in R&D
for the modification of the T1GE product to increase its feature, performance and convenience. The
price of T1GE was lower than the average price of its competitors and fearing the perception of low
quality linked with low prices, the price of T1GE was increased to $560 from $550.

2
Dr. CR Rajan Board Room Simulation Shareholder’s Report

There was no term loan or shares issued during this period. The investment in CSR was increased by
$1.5 million. The company owned showrooms were increased to 8 since geeks usually purchase
more from company owned showrooms.

At the end of Round 2, our company ranked 2 in the leaderboard of market 2. The product
awareness for T1GE had increased among the geeks as expected. The market share however had not
increased considerably because the demand that had been created through the advertising was not
being met by the supply from the company. The production should have been ramped up further by
opening up new plants. We were also losing our market share in T1LO due to insufficient supply
from our plants. However, our credit rating improved to AA due to our good financial standings.

If we look at the profitability ratios, we can see that we are able to maintain decent numbers.

Ratio/Period Period 0 Period 1 Period 2 Period 3

Return on Assets (ROA) 0.72 0.44 0.34 0.19
Return on Equity (ROE) 3.72 4.72 5.55 3.93
Cashflow Margin 0.04 0.26 0.21 0.19
Debt to Equity 0.09 0.13 0.08 0.06

As we can see that the ROA is declining year on year, this is because we have made large
investments in previous years and as we move further these investments will give positive returns,
which will be beneficial for the business.

We are able to maintain stable ROE, it can help to measure if a company is making profits or not
doing its job efficiently in terms of making profit. We can see gradually increasing ROE for first 2
periods but in the last period it has slightly decreased and this period was the period of recession but
still we were able to maintain our ROE at decent level.

Cashflow margin can tell how our company is able to converts its sales to rupees, as we can see we
are having gradual increase in our cash flow margin, which tells us that we have enough cash
reserves despite of making such huge investments we are able to maintain our cash margin. We
assure our shareholders that the available cash will be utilized properly and for value creation for
our shareholders.

As debt to equity ratio for our company is very low, we have higher risk-taking capacity in the
market.