Industry Structure and Developments
e Indian automotive industry is the pillar of the manufacturing sector
and provides employment to a large pool of people. Being the fourth largest automotive
market globally, the sector plays a vital role in India?s aspiration to become a USD
5 Trillion economy. Increasing urbanization, large working age population, rising incomes
and strong impetus on infrastructure and construction sectors have been driving the
industry?s growth over the years. e foundry industry, also known as the casting
industry, plays the role of a ‘mother? industry in India. e Indian foundry
industry manufactures metal cast components for applications in Auto, Tractor, Railways,
Machine tools, Sanitary, Pipe Fittings, Defence, Aerospace, Earth Moving, Textile, Cement,
Electrical, Power machinery, Pumps / Valves, Wind turbile generators etc. Foundry Industry
has a turnover of approx. USD 19 billion with export approx. USD 3.1 billion. However,
Grey iron castings have the major share i.e. approx 68% of total castings produced. e
total Manpower in Foundry Sector is approx. 500,000 directly & 15,00,000 indirectly. e
foundry sector is highly labour intensive & currently generates employment for 2
Million directly & indirectly mainly from socially & economically weaker sections
of society. (Source: Foundry Informatics Centre) ere are approximately 4500 units out of
which 90% can be classified as Small Scale units & 10% each as Medium & Large
Scale units. Approximately 1500 units are having International Quality Accreditation.
Several large Indian foundries are modern and globally competitive with efficient
induction furnaces and a growing awareness about environment and energy conservation.
(Source: Foundry Informatics Centre) e auto-casting industry in India, can be categorized
into ferrous and nonferrous segments. e industry comprises major engine components such as
cylinder heads, cylinder blocks, gear housing and braking components such as braked rums
and housings, clutch and _y wheel housing.
Opportunities, reats and Outlook
e Indian automotive industry, the fourth largest industrial sector in
the country, is on the upswing and all global producers are relocating their manufacturing
units to this region to be near the upcoming biggest consumer markets. At present, India
is the third-largest casting producer in the world. is will further create more
opportunities for castings and forging industries both for domestic production and for
exports.
Casting and forging are one of the key engineering segments supplying
various components to end-user industries such as Railways, Automobile, Defence,
Aerospace, Material handling, Construction equipment and Mines. In this regard, the Indian
casting and forging sector is in a good position to generate higher revenues from the auto
sector. Major expansion of manufacturing units, by way of organic and inorganic growth,
has been playing an important role in this industry.
Few years ago, the industry was passing through a lean phase with many
units shutting down due to lack of business. But things have looked up now and an air of
optimism prevails.
Since all engineering & other sectors use metal castings in their
manufacturing, the role of foundry industry to support manufacturing is very vital. e
foundry market is linked directly with the development of the overall automotive sector.
Growth of the automobile industry is expected to generate huge demand for castings
producers. Based on volume, India is currently the fourth largest automobile industry,
globally. Rapid growth of the automotive sector has also led to the steady development of
other subsidiary industries like the auto component industry, indicating huge demand for
castings.
Foundries across India are presently upgrading facilities and
technologies in a bid to improve their productivity and increase their capacity. To cater
to the growing demand, this industry is embarking on major expansions and technological
initiatives. Industry stakeholders are taking initiatives to acquire technology,
knowledge, experience, and expertise in the industry. Meanwhile, the Indian casting and
forging industry has upgraded itself to be in sync with international practices. In view
of the enormous potential, domestic players have started building up world class
capabilities by either putting up greenfield projects or acquiring sick global units and
turning them around to set up foreign businesses in India.
However, in spite of the opportunities, the industry faces several
challenges and these need to be addressed on a priority basis. Primarily, the industry
lacks acutely the resources for upgrading its technological status and there is also a
dearth of quality or skilled manpower.
Financial and Operational performance
e performance of the Engineering Division of the Company for the year
ended March 31, 2023 is as follows:
| Sr. No. |
Particulars |
Financial Year ended March 31, 2023 |
Financial Year ended March 31,2022 |
| 1. |
Gross Sales in Quantity (MT) |
- |
- |
| 2. |
Gross Production (MT) |
- |
- |
| 3. |
Sales & other Income (Rs. in lacs) |
961.16 |
2125.16 |
| 4. |
Total Expenditure (Rs. in lacs) |
(445.72) |
(522.23) |
| 5. |
Profit before finance cost, Depreciation,
Amortization & Tax (Rs. in lacs) |
515.44 |
1602.93 |
| 6. |
Finance Cost (Rs. in lacs) |
(2.93) |
(412.10) |
| 7. |
Depreciation (Rs. in lacs) |
(619.71) |
(739.99) |
| 8. |
Profit before Tax (Rs. in lacs) |
(107.20) |
450.84 |
| 9. |
Other comprehensive income |
63.13 |
74.23 |
| 10. |
Total comprehensive income/ (loss) for the
year |
(44.07) |
525.07 |
Due to continued situation of industrial unrest at the Engineering
Division, the Company was forced to declare a lockout of its Engineering operations w.e.f
October 22, 2019 which remain continues as on date.
During the year under review, no production activities were carried out
due to said lockout.
Risk & Concerns
e Company?s success depends on its ability to offer products as
per customers? requirements in a timely manner and maintaining
competitiveness/quality. In the short run, the need to established a high productivity
environment through appropriate collaboration with workmen is key to established
competitiveness. Intensifying competition and volatility in input cost could materially
and adversely affect the Company?s sales, financial conditions and results of
operations.
Internal Controls
e Division has maintained adequate internal control systems
commensurate with the nature of its business and size and complexity of its operations.
ese are regularly tested for their effectiveness by Statutory as well as Internal
Auditors. Further, the internal control systems have been designed to provide reasonable
assurance with regard to recording and providing reliable financial and operational
information. e Audit Committee reviews the adequacy and effectiveness of the
Company?s internal control environment and monitors the implementation of audit
recommendations, if any.
Manpower Development
e Engineering division has established a training centre called
"Gurukul". However due to continued situation of industrial unrest at the
Engineering Division and subsequent declaration of a lockout of its Engineering operation
w.e.f October 22, 2019, during the year under review no development held under this
aspect. e total number of people on the rolls of Engineering Division are 530.
Industrial relations
In February 2016 after the wage settlement, certain disgruntled workmen
started their nefarious activities. e workmen indulged in repeated instances of go slow,
tool down, stoppage of work/ strikes besides violence and threatening/ beating the
staff/supervisors. Due to continued situation of industrial unrest at the Engineering
Division, the Company was forced to declare a lockout of its Engineering operation w.e.f
October 22, 2019.
DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED
TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN FOLLOWING KEY FINANCIAL RATIOS, ALONG WITH
DETAILED EXPLANATIONS THEREFORE:
| Particulars |
|
On Standalone Basis |
|
|
On Consolidated Basis |
|
|
for Financial Year 2022-23 |
for Financial Year 2021-22 |
% Change |
Explanation |
for Financial Year 2022-23 |
for Financial Year 2021-22 |
% Change |
Explanation |
| Debtors Turnover Ratio |
0.44 |
7.09 |
(94%) |
Please refer note no. i |
1.27 |
5.34 |
(76%) |
Please refer note no. ii |
| Inventory Turnover Ratio |
0.01 |
0.09 |
(94%) |
Please refer note no. i |
6.22 |
5.88 |
6% |
Please refer note no. ii |
| Current Ratio |
0.34 |
0.34 |
0% |
Please refer note no. i |
0.71 |
0.67 |
5% |
Please refer note no. ii |
| Debt Equity Ratio |
- |
1.73 |
100% |
Please refer note no. i |
- |
1.95 |
100% |
Please refer note no. ii |
| Interest Coverage Ratio |
(1.91) |
5.32 |
(136%) |
Please refer note no. i |
5.89 |
6.95 |
(15%) |
Please refer note no. ii |
| Operating Profit Margin |
(67.46) |
21.08 |
(420%) |
Please refer note no. i |
0.09 |
0.47 |
(82%) |
Please refer note no. ii |
| Net Profit Margin |
(102.71%) |
16.14% |
736% |
Please refer note no. i |
0.03 |
0.43 |
(92%) |
Please refer note no. ii |
DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE
IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:
| Particulars |
|
On Standalone Basis |
|
|
On Consolidated Basis |
|
|
For Financial Year 2022-23 |
For Financial Year 2021-22 |
% Change |
Explanation |
For Financial Year 2022-23 |
For Financial Year 2021-22 |
% Change |
Explanation |
| Return on net worth |
(0.33) |
0.95 |
(135%) |
Please refer note no. i |
0.12 |
1.62 |
(92%) |
Please refer note no. ii |
Note:-i. Note – Standalone
In view of continued situation of industrial unrest at Engineering
Business Undertaking of the Company, situated at Village Asron, District Shaheed Bhagat
Singh Nagar (Punjab), the Company has declared the lockout of the operation of its said
business undertaking w.e.f. October 22, 2019. is lockout continued as on the date of close
of the financial year 2022-23. Consequent to above, the key financial ratio of the Company
continued to remain adverse during the current year. ii. Note – Consolidated
In view of continued situation of industrial unrest at Engineering
Business Undertaking of the Company, situated at Village Asron, District Shaheed Bhagat
Singh Nagar (Punjab), the company has declared the lockout of the operation of its said
business undertaking w.e.f. October 22, 2019. is lockout continued as on the date of close
of the financial year 2022-23. Consequent to above, the key financial ratio of the company
continued to remain adverse during the current year.
However, the business operation of IT business continues to remail
stable.
Previous year figures have been re-grouped / re-classified wherever
necessary to correspond with current year classification/ disclosure.
Cautionary Note
Statements in the Management Discussion & Analysis report
describing the Division?s objectives, estimates or projections may be forward looking
statements within the meaning of applicable securities law and regulations. Actual results
may materially differ from those expressed or implied. Important factors that can make a
difference to the Division?s operations include change in the main client?s
purchase procedures, changes in Government regulations, tax regimes, economic outlook in
India and the USA and other incidental factors.
For and on behalf of the Board of Directors For DCM Limited
|
Sd/- |
| Place: Delhi |
Bipin Maira |
| Date: August 11, 2023 |
Chairman |
+91-9892691696
