MANAGEMENT DISCUSSION AND ANALYSTS REPORT
INDUSTRY STRUCTURE AND DEVELOPMENTS
IMF has projected global GDP growth to decelerate to 2.8% in 2023 from 3.4% in 2022 due
to developments related to instability in financial sector, expectations of steeper
interest rate hikes by major central banks to fight inflation and spillover effects from
the war in Ukraine with gas supplies from Russia to Europe tightening.
As per IMF, despite the shocks of COVID-19, the Russian-Ukraine conflict, and
synchronized policy rate hikes by central banks to curb inflation, India Continues to be
the fastest-growing major economy in FY24, with a projected GDP growth rate of 6.1%.
Indias economy has position itself to ascend to the pre-pandemic growth path. However,
high inflation, aggressive tightening of monetary policies by advanced economies, opening
up of China and an unstable labor market remain major challenges.
The copper rod market is experiencing robust growth owing to the increasing demand from
sectors such as power transmission, electronics, and telecommunications. The market is
witnessing a surge in investments in infrastructure development projects, further fueling
the demand for copper rods. Moreover, the growing emphasis on renewable energy sources is
driving the need for copper rods in the production of solar panels and wind turbines.
OPPORTUNITIES
Indian Electrical equipment Industry is set for revival and growth in power sector.
This is an opportunity for demand in winding wires & strips, which is one of the
principal inputs to electrical machines & electronic equipment. It is expected that
customer base will expand and new customer base will be generated. The increasing adoption
of electric vehicles presents a significant opportunity for the copper rod market. EVs
require a larger amount of copper rods compared to conventional vehicles, as they utilize
copper extensively in their electrical systems.
THREATS
Increasing competition from domestic and foreign players could lead to margin
contraction due to pricing pressure. Some of the larger global players are already present
in India. Highly fluctuating price of copper, which is the principal input to the winding
wire Industry, continues to be of serious concern. The rising cost of production,
especially due to wage increase and rise in prices of other materials & services,
short & stringent delivery schedule by customers in the background of highly volatile
copper prices, Fiscal policy of government encouraging imports of inputs which are
detrimental to Indian Electrical Industry, competition from other leading winding wire
manufacturers etc. continue to threaten the profitability of your Company.
OUTLOOK
Global demand for refined copper is expected to increase by ~2% in 2023. China is
expected to grow by ~1.8% and the rest of world is expected to grow by ~3.5%. Demand for
refined copper in India is likely to improve and revert to pre-COVID.
The world copper mine supply grew by 3.5% in 2022 mainly on account of ramp up in
output from new mines in Congo, Peru, etc. The ramp up of projects will continue to
support concentrate supply in 2023, but high level of disruptions will restrict annual
growth rate to 2.3%. While the copper market is likely to be balanced in 2024, deficit is
expected to emerge in 2025. Recycling along with product substitutions shall be key in
helping to mitigate some of this gap.
Domestic copper demand is driven largely by rods, which is the downstream product for
the copper business. Companys strategy of enhancing copper VAP capacity through copper
rods and copper inner grooved tubes will help it gain a larger market share and meet the
growing demand for copper in the domestic market.
RISKS AND CONCERNS
In the winding wire business, the global demand and supply of copper and its prices
plays a vital role and could significantly affect your Companys turnover. Your company is
fairly exposed to the domestic and global political and economic risks. The prices
advanced on rapidly increasing demand for copper from China, India and the other emerging
economies of Asia. Your company also continuously keeps working on getting approvals from
new and renowned customers to increase its market share commensurate with its capacity.
Intense competition in the market could affect our cost advantages and result in decreased
turnover. Failure to complete fixed price, fixed time frame deliveries could result in
lower revenues of the company.
The business of your company could suffer if we fail to anticipate and develop new
products and enhance existing range to keep pace with the rapid changes in the winding
wire industry. Currency fluctuations could affect the results of operations. Your
companys manufacturing facilities are based in India. Any changes in the legal, fiscal
and other regulatory regimes of our country could affect our performance. In the event
that the Government of India brings about any changes in import tariffs in India and
reduction or curtailment of income tax benefits available to some of our operations in
India can pose risks to your company. It also has a wide customer base and changes in the
legal, fiscal or regulatory regimes can also affect the competitiveness of our product and
affect your companys performance.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Companys internal control systems are commensurate with the nature of its
business, the size and complexity of its operations and such internal financial controls
with reference to the Financial Statements are adequate. A strong culture of internal
controls is pervasive throughout the Company. Regular internal audits at all locations are
undertaken to ensure that the highest standards of internal control are maintained. The
effectiveness of a business internal control environment is a component of senior
management performance appraisals. The primary aim of the internal control system is to
manage business risks with a view to enhance shareholder value and safeguard the Companys
assets. It provides reasonable assurance on the internal control environment and against
material misstatement or loss. The Company has in place a robust mechanism to deal with
Internal audit that involves having a dedicated Assurance & Control function. The
Audit Committee discusses audit plans, findings and observations made by the internal
auditors at its meetings. The findings made by the internal auditors are reviewed and
suggestions implemented
HUMAN RESOURCE DEVELOPMENT
Training: Training to employees at all levels is provided regularly to develop the
knowledge and skills. The management is fully committed to the development of its human
resources. Your company aims at providing in class training to each employee. Every new
recruit receives complete safety training and on the job training from his
colleagues/supervisor. Functional and developmental training is provided from time to time
to all employees to enhance their skills and productivity. There is an all-round support
from the management to the development of human resources.
Knowledge Management:
RML has a practice of sharing experiences of one company with other group companies in
various fields of production / finance / marketing. Knowledge Management is being
developed by involving and sharing of information on key performance parameters at all
levels which results in an overall improvement. This has been formalized by having a daily
Business Meeting which is held at all locations of the group companies
Industrial Relations: Your company continues to maintain healthy and cordial
industrial relations. The values and the culture of the group foster family feelings
amongst all its employees.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The financial statements have been prepared in accordance with the requirement of the
Companies Act, 2013 and applicable Accounting Standards issued by the Institute of
Chartered Accountant of India.
| Particulars |
Year Ended 31.03.2023 |
Year Ended 31.03.2022 |
|
(Rs. in Lakhs) |
(Rs. in Lakhs) |
| Revenue from operations |
1,02,888 |
1,02,825 |
| Other income |
1,017 |
125 |
| Total Income |
1,03,905 |
1,02,950 |
| Expenses |
|
|
| Cost of Material consumed |
97305 |
97164 |
| Purchase of Stock in trade |
- |
2034 |
| Change in inventories of Finished goods, work in progress and stock-in-trade |
585 |
-622 |
| Employee Benefit Expenses |
574 |
365 |
| Finance Cost |
728 |
397 |
| Depreciation and amortization |
119 |
114 |
| Other Expenses |
2,482 |
2,082 |
| Total Expenses |
1,01,793 |
1,01,535 |
| Profit Before tax |
2,112 |
1,415 |
| Less: Provision for tax |
|
|
| Current T ax |
710 |
367 |
| Deferred Tax |
34 |
46 |
| Total Tax expenses |
744 |
413 |
| Net Profit for the Year |
1,368 |
1,002 |
| Less: Income Tax Paid for earlier year |
- |
- |
| Add: Other Comprehensive Income |
- |
- |
| Total Comprehensive Income |
1,368 |
1,002 |
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
The significant changes in the key financial ratio of the Company, as compared to the
previous year are as given below-
| Sl. No. Particulars |
FY 2022-23 |
FY 2021-22 |
Change (%) |
Explanations |
| 1. Inventory Ratio (%) |
18.43 |
29.39 |
(37.29) |
Increase in Inventory Level |
| 2. Debt Equity Ratio (%) |
1.51 |
1.73 |
(12.96) |
Decrease our debts from bank. |
| 3. Net Profit (%) |
1.33 |
0.97 |
36.52 |
Increase in revenue from investments. |
| 4. Debtor turnover Ratio |
10.51 |
9.90 |
6.17 |
Our Debtor increased. |
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