Trends – Overall Total

Total – Month wise Trend Total – YoY Trend

1,400 60.0%
1,300 53.1% 1,275
1,220 55.0% 12,500 19.9% 44.5%
1,200 46.3% 1,140 50.0% 44.1% 11,985 44.0%
44.9% 1,080 1,070 1,060 12,000
1,100 43.3% 41.3% 43.0% 1,050 43.5%
45.0%
1,000 39.7% 38.3% 38.7% 38.8% 11,500 43.0%
905 37.7% 40.0%
1,010 35.9% 42.5%
900 11,000
35.0% 42.0%
800 750 750
675 30.0% 10,500 41.5%
700 10,000 41.3%
600 25.0% 10,000 41.0%
20.0% 40.5%
500 9,500
40.0%
400 15.0%
9,000 39.5%
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 FY20 FY21

Revenue Margin% Revenue Margin%

FY20 Revenue - Product Mix FY21 Revenue - Product Mix

1500; 15% 615; 5%

4500; 45%

5000; 42% 6370; 53%

4000; 40%

Product A Product B Product C Product A Product B Product C

Overall Total - Margin Analysis
Impact on Overall Total
FY21 Gross Profit Walk
Product Gross Profit Gross Margin
6000

478 510
5000
579 Product A
4000
Product B
3000
4952 Product C
2000
4405
• Product A Rev grown by 41.6% while the cost increased by 56.2%,
1000 bringing down the margin from 49.0% in FY20 to 43.7% in FY21
• Product B Rev grown by 25.0% while the cost increased only by
0
FY20 Gross Profit Product A Contribution Product B Contribution Product C Contribution FY21 Gross Profit
21.8%, thus increasing the margin from 40.0% in FY20 to 41.6% in
FY21
• Product C Rev de-grown by 59% while the cost decreased by
41.7%, bringing down the margin from 40.0% in FY20 to 14.6% in
FY21 FY21
FY21 Sales FY21 Cost Gross Profit Incremental
Product FY20 Margin Growth% Growth% Growth% Rev - Margin% FY21 Margin
Overall Gross Margin
Product A 49.0% 41.6% 56.2% 26.3% 31.0% 43.7%
 While Product A and Product B contributed to higher Gross Profits
Product B 40.0% 25.0% 21.8% 29.9% 47.8%% 41.6% in FY21, only Product B helped in increasing the overall margin
Product C 40.0% -59.0% -41.7% -85.0% -57.6% 14.6% (although due to one off event)
 Product A still had higher FY21 Margin than Product B, contributed
Total 44.1% 19.9% 25.7% 12.4% 27.6% 41.3%
higher Gross Profit than Product B but it dragged the Overall
margin down
 Product B’s margin increased in FY21 thus influencing the overall
margin positively
 Product C reduced the overall Gross profits and Gross margin
Reasons for YoY Decline in Margin

Product Reasons

Product A • Drastic Sales growth slow down in H2 (Starting Oct) while cost growth slowed down
much slower
• While the reported Margin showed uptick, there was a one time Benefit in Jul-20
when the Cost fell sharply. Adjusting for that. Adjusted Margin would be ~ 39.5%
Product B which would be decline of 0.5%
• It is observed margin fell down mostly in the months where revenue showed de-
growth MoM, margins remained flat/increased when revenue increased MoM
• Wild fluctuations in revenue growth is the main reason for margin decline
• Revenue decrease and becoming nil
Product C • Margin decline associated with any end of life product

Overall • All the above reasons led to margin decline

• Favorable Product mix helped a bit in arresting the margin decline
 Analysis & Recommendation
Product A

 Margin decline in Product A is due to sudden deceleration in Revenue (Sales) in H2.

 Margins are highly Correlated to Sales growth
 Need to understand why the sales growth decelerated in H2 and need to take corrective actions to get back on high growth journey

Product B

 While the monthly Revenue growth fluctuated a lot during the year, it is a stable margin business
 Cost is directly proportional to the sales except for the one off event in July-20
 Need to understand if there is any seasonal event that led to sudden cost decline in July, otherwise normalized margin would have declined in FY21

Product C
 Cost is not directly proportional to Sales, seem to have high Fixed cost and less variable cost
 Revenue seem to have ramped up in FY20 gradually and started to tapper off in late FY20 and continue to decelerate in FY21, Revenue stopped in Dec-20
 Closure of Product C should aid in improving the overall margin for FY22