Global Economy
The global economy seems to be at the cusp of a slowdown in 2023, with growth projected
to decline to 2.1 percent. The combined effects of monetary tightening and stricter credit
conditions are expected to exert pressure on economic activity throughout the latter part
of the year and into 2024. This deceleration might be particularly prominent in advanced
economies, where growth is expected to plummet from 2.7 percent in 2022 to 1.3 percent in
2023.
Furthermore, several emerging market and developing economies (EMDEs) are anticipated
to experience a more pronounced slowdown, particularly those grappling with heightened
fiscal and financial vulnerabilities. Many of these economies are forecasted to see growth
diminish to 2.9 percent in 2023, down from 4.1 percent in 2022, attributed to global
financial conditions and elevated debt levels.
While global headline inflation is estimated to decrease from 8.7 percent in 2022 to
7.0 percent in 2023 due to decreased commodity prices, core inflation is projected to
decrease more gradually. For the most part, inflation may not return to target levels
before 2025.
Initial indicators in early 2023 initially suggested the potential for a gentle
economic landing, characterized by lower inflation and stable growth. However, these
prospects may have become less certain due to persistent high inflation and recent
turbulence in the financial sector. Noteworthy reports from organizations such as the
United Nations, the OECD, McKinsey, and the IMF highlight diverse growth projections for
2023, underscoring the need for readiness in an evolving global economic landscape. The
United Nations report proposes that the global growth slowdown in 2023 might be less
severe than earlier anticipated. This is attributed to improved household spending in the
United States and the European Union, China s potential recovery, and the sustained
outlook for India. Global growth is now anticipated to ease from 3.1 percent in 2022 to
2.3 percent in 2023 (up from the 1.9 percent forecast in January). The OECD s Economic
Outlook anticipates a moderation in global GDP growth from 3.3 percent in 2022 to 2.7
percent in 2023, followed by a rebound to 2.9 percent in 2024. McKinsey s Global Survey on
economic conditions advises businesses to brace for an impending slowdown in global
economic growth. Goldman Sachs foresees global growth of approximately 1.8 percent in
2023, influenced by tightening financial conditions in the United States. J.P. Morgan s
midyear update notes resilient spending in the first half of the year, but also highlights
a moderation in growth and an ongoing shift in dynamics.
Worth mentioning is that Asian economies are broadly expected to be the main drivers of
global growth in 2023, benefiting from ongoing reopening efforts and milder inflationary
pressures compared to other regions. Thereby, the global economy displays signs of
improvement, though the upturn remains fragile, accompanied by notable downside risks.
While the United Nations report points to a potentially less severe global growth slowdown
in 2023, businesses should prepare for an environment of decelerating global economic
growth in the foreseeable future.
Indian Economy
India s economy has displayed remarkable resilience amidst global uncertainties,
achieving a robust 7.7% YoY growth in the first three quarters of FY 2022/23. The National
Statistical Office (NSO) reports an 8.7% real GDP growth in 2021-22, surpassing
pre-pandemic levels by 1.5%. While, the ongoing recovery seems to be driven by rural
consumption, urban consumption is also poised for a resurgence, particularly in
contact-intensive services. Investment activity receives a boost from capacity
utilization, government-driven capital expenditure, and strengthened bank credit. The
momentum in merchandise and services exports remains strong. The manufacturing focus,
government incentives, digitization, and global technology trends are the expected key
drivers of this growth. Additionally, the geopolitical factors seem to enhance India s
attractiveness as an investment destination.
While a well-vaccinated population helps mitigate health-related risks, the inflation
outlook remains uncertain due to global geopolitics and commodity prices. Although reduced
excise duties have moderated domestic petroleum prices, global crude oil prices continue
to stay elevated. By and large, India s strong macroeconomic indicators lay a solid
foundation for growth, with widespread vaccination, supply-side reforms, robust exports,
and fiscal flexibility acting as growth catalysts. The anticipated rejuvenation of the
private sector is also bolstered by a resilient financial system.
The IMF predicts India s growth at 5.9% in FY 2023-24 and an average of 6.1% over the
next five years. A positive outlook is maintained for the Indian economy, with investments
expected to drive sustainable growth. FY 2023-24 growth is projected at 6.0%-6.5%, even as
the global economy faces challenges. Averaging a growth rate of 6.7% until 2031, driven by
manufacturing and services, S&P Global foresees India becoming the world s
third-largest economy by 2027. India s decade-long average GDP growth of 5.5% solidifies
its status as the fastest-growing economy.
The Indian government s policy initiatives, investments in technology and energy, and
strategic planning position the country for continued economic growth. The Union Budget
2022-23 sets the stage for growth through public investment, inclusive development,
productivity enhancement, and financing avenues. Tax and regulatory measures provide
clarity and support growth.
Overall, India s resilient economy is fortified to navigate challenges. Strategic
investments, policy initiatives, and proactive measures ensure sustained economic
prosperity amidst global dynamics and oil price fluctuations.
INDUSTRY STRUCTURE AND DEVELOPMENT (Wires and Cables Industry)
The Indian wires and cables industry is poised for significant growth, and by some
estimates, it s projected to cross the Rs. 1,000 billion mark in FY 23. This growth
is driven by substantial government investments in infrastructure. Notably, initiatives
like the Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya scheme) and Power for all
are set to accelerate demand for wires and power cables. These schemes focus on rural
household electrification and transmission and distribution (T&D) efficiencies.
Besides, commercial establishments and public utilities are expected to contribute to the
demand for cabling. The expansion of renewable energy capacities is expected to fuel the
need for solar cables and elastomeric cables.
In metropolitan areas (Tier I cities), the demand, especially, for underground cables
is expected to grow due to space limitations for tower installations and heightened demand
from infrastructure projects such as metro networks etc. Over the past five years, the
wires and cables industry in India has exhibited a robust compound annual growth rate
(CAGR) of approximately 13.68%, reaching Rs. 788 billion in Fiscal 2021. The
industry is projected to sustain this growth trajectory, with an anticipated CAGR of
around 14.50% in value terms, reaching approximately Rs. 1,550 billion by Fiscal
2026. The wires and cables market constitute nearly 40% of the electrical industry and is
experiencing a CAGR of 15% primarily due to the expansion of the power and infrastructure
sectors. Even globally, the wires and cables market witnessed an estimated size of $183.14
billion in 2020 and is projected to expand at a compound annual growth rate (CAGR) of 4.4%
from 2021 to 2028. The industry is anticipated to reach a substantial worth of $236.1
billion in 2024, growing at a CAGR of 8.00%.
The remarkable growth is underpinned by government investments in areas such as smart
cities, metro railways, airport modernization, power, and hydrocarbon sectors. The wire
and cable industry s prospects are interconnected with several sectors, including power,
telecommunications, railways, real estate, steel, cement, and infrastructure.
OPPORTUNITIES
Demand Drivers, and Opportunities in the Wire and Cable Industry
The wires and cable industry in India is experiencing rapid expansion driven by the
government s resolute dedication to infrastructure development and increased investments
across various sectors. This robust growth in the wires and cables market is fuelled by a
confluence of factors, including heightened government expenditure on infrastructure,
initiatives to promote renewable energy, urbanization, industrialization, emerging
technologies, and the government s unwavering focus on the infrastructure sector.
Few of the Sectoral Opportunities:
Hydrocarbons: Specialized cables and wires play a crucial role in the demanding
conditions of the oil and gas sector, where many times they must withstand extreme
temperatures and harsh environments. The hydrocarbons sector, encompassing oil
exploration, drilling, and refining, relies heavily on these durable cables. As this
sector experiences growth, the demand for such resilient cables is anticipated to rise
significantly.
Railways and Metro Rails: Ambitious expansion and modernization of railways and metro
rail networks demand extensive cabling. The government s strategic focus on high-speed
rail networks and metro rails unveils significant prospects for the wires and cable
industry.
Power: The power sector remains a substantial consumer of cables and wires. The
government s drive towards universal electrification, exemplified by initiatives like
Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya scheme) and Power for All, is poised
to fuel demand for building wires and power cables.
Metals: The metals sector presents another opportunity for the wires and cable industry
in India, with the demand for cables used in the mining and processing of metals expected
to increase.
Fertilizers and Chemicals: Similarly, the fertilizers and chemicals sector mandates
cables and wires resilient enough to thrive in challenging environments. The expected
growth in this sector is likely to drive demand for these specialized cables.
Airports Modernization and Expansion: The modernization and expansion of airports
entail substantial cabling needs. The government s commitment to revamp existing airports
and establish new ones augments opportunities for the wires and cable industry.
Smart Cities: The government s strategic focus on smart city development paves the way
for considerable growth prospects in the wires and cable industry. The evolution of smart
cities demands substantial cabling for diverse applications like smart grids, intelligent
homes, and advanced transportation systems.
Building and Industrial Automation: The burgeoning building and industrial automation
sector introduces promising prospects. The demand for specialized cables and wires,
capable of withstanding harsh conditions, is projected to surge in line with sectoral
expansion. Water and STP: Water and sewage treatment plants necessitate specialized cables
engineered to endure extreme conditions. As these plants witness growth, the demand for
these specialized cables is expected to escalate.
Few of the Market Drivers:
The strategic focus on infrastructure projects and government investments remains
pivotal drivers for the wire and cable market in India. Investments in smart grid projects
and enhancements of power transmission and distribution systems are poised to generate
global demand for wires and cables. The ongoing expansion of power transmission &
distribution networks, coupled with investments in real estate and transportation, further
enhance the industry s growth prospects.
Renewable Energy Boost: India s ambitious renewable energy targets have significantly
propelled the wire and cable industry s growth trajectory. The expansion of power
transmission & distribution networks, combined with investments in transportation and
real estate, fortifies the sector s bright future.
Urbanization and Industrialization: Historically, urbanization and industrialization
have been consistent growth engines for the Indian wire and cable industry. The
substantial growth in sectors like infrastructure, power generation, telecom, transmission
& distribution, oil & gas, railways, metro rails, metals, hydrocarbons,
fertilizers, chemicals, airports, smart cities, industrial automation, water, and STP
stems from the burgeoning urbanization and industrialization trends in developing nations.
Emerging Technologies: Emerging technologies such as cloud-based data sharing, 5G
spectrum, robotics, automation, and Industry 4.0 are catalysts driving the wire and cable
industry s growth. These innovations heighten the demand for secure, efficient, and
high-performance cables and wires, aligning seamlessly with the evolving technological
landscape.
Governments Infrastructure Focus: The government s dedicated attention to
infrastructure projects across various sectors provides an impetus for substantial growth.
The convergence of factors such as infrastructure development, renewable energy, and
electrification schemes amplifies the growth potential for the industry. Thereby,
collectively, the alignment of these sectoral opportunities and market drivers positions
the wires and cable industry for a promising and prosperous future. Sources:
https://blogs.worldbank.org/developmenttalk/ global-economic-outlook-five-charts-1,
https:// www.imf.org/en/Publications/WEO/Issues/2023/04/11/
world-economic-outlook-april-2023, https://
www.conference-board.org/topics/global-economic-outlook,
https://www.worldbank.org/en/news/press-release/2022/01/11/global-recovery-economics-debt-commodity-inequality,
https://www.imf.org/en/Blogs/ Articles/2022/07/26/blog-weo-update-july-2022, https://
www.un.org/development/desa/dpad/publication/world-economic-situation-and-prospects-june-2023-briefing-no-172/,
https://www.morganstanley.com/ideas/economic-outlook-mid-year-2023-global-gdp-slowing,
https:// www.worldbank.org/en/news/press-release/2023/04/04/
indian-economy-continues-to-show-resilience-amid-global-uncertainties,
https://www2.deloitte.com/us/en/
insights/economy/asia-pacific/india-economic-outlook.html,
https://www.reuters.com/world/india/sp-sees-indian-economy-growing-by-average-67-2031-amid-short-term-challenges-2023-08-03/,
https:// www.morganstanley.com/ideas/investment-opportunities-in-india,
https://industrialoutlook.in/e-p/wires-cables-conductors/wire-and-cables-industry/,
https:// www.wirecable.in/2023/02/industry-trends-driving-innovation/,
https://engmag.in/wire-and-cable-industry-to-register-significant-growth-in-next-five-years/,
https:// www.tndindia.com/emerging-growth-drivers-for-the-wire-and-cable-industry/
Company Overview
Cords Cable Industries Limited (CORDS) stands out as a specialized Control &
Instrumentation cable company and a distinguished player offering a comprehensive range of
cable products across multiple sectors and industries. With a history spanning over three
decades, CORDS boasts a rich reservoir of experience and has established a robust brand
identity, especially, in the B2B sector. The expertise and spectrum of offerings
encompasses the design, development, and manufacturing of an extensive cable portfolio,
including Instrumentation, Control, Power, Thermocouple Extension/Compensating, and
Communication cables, among others.
Our cables, meticulously designed and manufactured, adhere to rigorous international
standards including EN, BS, IEC, and VDE, ensuring top-tier quality for applications
spanning and serving across pivotal sectors and industries including, oil & gas,
hydrocarbons, airports, railways, metro rail, smart cities, and the power sector, and
fostering seamless connectivity.
At the heart of our operations is the drive to deliver cost-effective and high-quality
solutions catering to diverse electrical connectivity needs. We have carved a niche for
ourselves by crafting custom cables tailored precisely to the unique specifications of our
customers. This relentless dedication has garnered industry recognition and positioned us
optimally for future growth. Our investments in infrastructure and engagement with diverse
industries underscore a positive growth trajectory. The current annual production capacity
of 65,000 core-cable-kilometres is distributed across two cutting-edge manufacturing
facilities in Rajasthan, where the Kaharani unit contributes 35,000 core-cable-kilometres
per annum and is complemented by the Chopanki unit s annual capacity of 30,000
core-cable-kilometres.
Whilst navigating the dynamic business landscape, our commitment remains unwavering in
enhancing efficiency as we remain steadfast on rigorous cost control, proactive preventive
maintenance, and the strategic optimization of our product mix. These initiatives align
with our goal of achieving economies of scale and maintaining our esteemed reputation as a
leading player, especially, in the Control & Instrumentation cable sector.
CORDS exemplifies a legacy of innovation and quality. Our persistent focus on
customer-centricity and adaptability positions us to cater to the ever-evolving demands of
diverse industries, solidifying our role as a trusted partner in connectivity solutions.
RISKS, THREATS, AND CONCERNS
Finance Cost Risk: Finance Cost risk arises from the potential of paying a high rate of
interest on term loans and other funds, as well as non-fund-based facilities availed by
the company from banks and financial institutions. The company endeavours to mitigate this
risk by monitoring the interest rates offered by various banks and financial institutions
and by considering the option to swap its long-term or short-term loans with the ones
offering lower interest rates.
Liquidity Risk: Liquidity risk arises from the possibility that the company may be
unable to meet short-term financial demands. This typically arises from the challenge of
converting a security or hard asset to cash without incurring a loss of capital or income
in the process. To manage liquidity risk, the company ensures the availability of
sufficient funds at all times to meet its liability obligations on or before the due
dates.
Raw Material Availability and Price Fluctuations:
Occurrences of scarce availability and price volatility of company s basic raw
materials, such as Copper, Aluminium, Steel, and PVC, can significantly impact company s
profits. To mitigate these risks, the company endeavours to have diversification of
suppliers, establishes Memorandums of Understanding (MOUs) with its suppliers, includes
price escalation clauses for large orders, and employs hedging strategies for these raw
materials on the commodity exchange.
Foreign Exchange Risk: Foreign exchange risk is a financial risk posed by an exposure
to unanticipated changes in the exchange rate between two currencies. Company may import a
part of its raw materials and is also engaged in export of its products. To mitigate this
risk, the company resorts to forward booking wherever deemed appropriate.
Cybersecurity Threats Risks: Cybersecurity threats includes risks of cyberattacks and
data breaches. To mitigate this risk, the company implements robust cybersecurity
measures, employee training, and data protection protocols.
Human Resource Risk: In the absence of quality human resources, the company may not be
able to execute its growth plans. To mitigate this risk, the company places due importance
to its human capital assets and invests in building and nurturing a strong talented pool
to gain strategic edge and achieve operational excellence in all its goals.
FINANCIAL & OPERATIONAL PERFORMANCE
(INR in Lacs)
Particulars |
FY23 |
FY22 |
Gross Sales |
61697.47 |
51514.13 |
Net Income from Operations |
52625.51 |
43799.24 |
Total Expenditure |
|
|
Consumption of Raw Material |
42097.06 |
34324.73 |
Manufacturing Expenses |
2519.35 |
2117.82 |
Staff Cost |
2542.96 |
2226.31 |
Administrative & Other expenses |
1512.60 |
1309.00 |
OPBITDA |
3953.54 |
3821.38 |
Depreciation & Amortisation |
768.91 |
733.08 |
OPBIT |
3184.63 |
3088.30 |
Finance charges (Net) |
2349.29 |
2351.63 |
OPBT |
835.34 |
736.67 |
Non-Operating Income / |
139.21 |
122.79 |
Other Income |
|
|
PBT |
974.55 |
859.46 |
Current Year tax |
306.17 |
261.76 |
Deferred tax (Assets) |
(53.56) |
(38.86) |
Other Comprehensive Income (Loss) |
(8.62) |
(1.29) |
PAT |
713.32 |
635.27 |
During the year under review, Net Sales from Operations stood at Rs. 52,625.51
Lacs, as against Rs. 43,799.24 Lacs in FY 22. The Operational Profit, before making
provision for Interest, Depreciation and Amortization, stood at Rs. 3,953.54 Lacs
for FY 23 as against Rs. 3,821.38 Lacs in FY 22. Thereby, the total comprehensive
income comprising profit / loss and other comprehensive income for the period is Rs.
713.32 lacs as against a PAT of Rs. 635.27 lacs earned in the previous year.
Your company in the last Financial Year obtained approval from prestigious domestic /
global customers covering sectors like Hydrocarbon, Power, Fertilizers & Chemicals,
Cements, Metros, Water, Railways and infra projects and have obtained approvals from
various customers like Ahmedabad Water supply, U.P. Jal Nigam, NCRTC Projects, SRF, Kutch
Copper, Carbon Black, Adani Infra for Power, Control, Instrumentation and Communication
cables. Besides, your Company has successfully obtained CE Marking Certification for our
products and also obtained approval from Adnoc (UAE) for their products. Your Company has
also executed large volume orders between Rs. 25 Cr. to Rs. 50 Cr. from
prestigious customers like, L & T Hydrocarbon A/c IOCL Paradip, TPL A/c HRRL,
Technimont, Ultratech Cement, Technip Paradeep, TPL-ONGC Kakinda, etc. Your Company s
current focus is on increasing its business from various sectors including Pharma, Cement,
Steel, Automobile industry apart from Hydrocarbons, Metros, Water Projects, Process
Industry, Railways Signalling and Protection systems and infrastructure projects. Your
Company also participated in various national and international electrical exhibitions
including, ELECRAMA, ADIPEC Abu Dhabi and Nigeria Oil & Gas Abuja, Nigeria, etc.
SIGNIFICANT CHANGES IN FINANCIAL RATIOS
During the year, on a standalone basis, there was no significant change i.e., which are
more than 25% as compared to the previous year, in the financial ratios compared to the
previous year. However, there is a slight change in Return on Net Worth as compared to the
previous year which is summarized below:
Particular |
Consolidated |
Change in (%) |
Explanation (in case of significant change) |
|
FY 2022-23 |
FY 2021-22 |
|
|
Debtor Turnover |
4.45 |
4.33 |
2.77 |
N.A. |
(no. of times) |
|
|
|
|
Inventory |
6.34 |
5.36 |
18.28 |
N.A. |
Turnover |
|
|
|
|
(no. of times) |
|
|
|
|
Interest |
1.41 |
1.36 |
3.68 |
N.A. |
Coverage Ratio |
|
|
|
|
(no. of times) |
|
|
|
|
Current Ratio |
1.60 |
1.54 |
3.90 |
N.A. |
(no. of times) |
|
|
|
|
Debt |
0.12 |
0.11 |
9.09 |
N.A. |
Equity Ratio |
|
|
|
|
(no. of times) |
|
|
|
|
Particular |
Consolidated |
Change |
Explanation (in case of |
|
|
|
in (%) |
significant change) |
|
FY |
FY |
|
|
|
2022-23 |
2021-22 |
|
|
Operating |
6.05% |
5.87% |
3.07 % |
N.A. |
Profit |
|
|
|
|
Margin (%) |
|
|
|
|
Net Profit |
1.36% |
1.45% |
(6.21) % |
N.A. |
Ratio (%) |
|
|
|
|
Return on Net Worth (%) |
4.58% |
4.27% |
7.26% |
This ratio has improved due to an increase in operating revenue and
corresponding absolute increase in Net Profit After Tax (PAT). |
SEGMENTAL OVERVIEW
The company operates under a single product segment i.e., Cables. The company mainly
focuses on specialized instrumentation cable and control cables which differentiates it
from most other wire & cable players in the country.
INTERNAL CONTROL SYSTEM & THEIR ADEQUACY
The system of Internal Control provides for maintenance of proper accounting records,
reliability of financial information and assures its operations are effective and
efficient, and its activities comply with applicable laws and regulations. The internal
audit is carried out by a team headed by Chartered Accountant and covers key areas of
company s business.
INDUSTRIAL RELATIONS AND HUMAN CAPITAL
The Company strives to provide the best working environment with ample opportunities to
grow and explore. The Company maintained healthy, cordial, and harmonious industrial
relations at all levels throughout the year. Every initiative and policy of the Company
takes care of welfare of all its employees. The human resource development function of the
Company is guided by a strong set of values and policies. Also, during the year under
review the number of permanent employees on the rolls of Company is no(s) 219.
FUTURE OUTLOOK
The vision of CORDS is to be recognized as a leading global player, providing products
and services, offering comprehensive solutions to the electrical, data and signal
connectivity requirements of businesses, institutions as well as household users. It
focuses on capturing new markets by developing customers in new and existing territories,
to provide new cables for special applications like solar, marine, low temperature cables,
cables for automobiles etc.
DISCLOSURE OF ACCOUNTING TREATMENT
In the preparation of the financial statements, the Company has followed the Accounting
Standards referred to in Section 133 of the Companies Act, 2013. The significant
accounting policies which are consistently applied are set out in the Notes to the
Financial Statements.
CAUTIONARY STATEMENT
Statement made in this report in describing the company s objectives, estimates and
expectations are Forward looking Statement within the meaning of applicable laws and
regulations. They are based on certain assumptions and expectations of future events but
the company, however, cannot guarantee that these assumptions are accurate or will be
materialized by the company. Actual results may vary from those expressed or implied,
depending upon the economic conditions, Government policies and/or other related factors.
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