The Management Discussion and Analysis Report represents the key
performance highlights of the Financial Year 2022-23, pertaining to the Companys
business. This review should be read in conjunction with the Report presented in the other
sections i.e., the Companys financial statements, the schedules and notes thereto
and the other information included elsewhere in this Annual Report. The Companys
financial statements for the Financial Year ended March 31, 2023 have been prepared in
accordance with Indian Accounting Standards (IndAS) and in compliance of the requirements
of Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
Industry Structure and Developments:
During the first half of the Financial Year 2022-23, we witnessed that
the global economy encountered various difficulties, including fluctuating prices of
essential goods and resources, elevated inflation, and disruptions in supply chains
resulting from the Russia-Ukraine conflict. However, the economy demonstrated resilience
in the second half as it began to recover from the impacts of the pandemic and
geopolitical tensions. Central banks implemented synchronized rate hikes and stricter
monetary policies to effectively address these challenges, combat inflation and stabilize
the markets.
According to International Monetary Funds (IMF) projection, the
global economic growth is expected to bottom out at 2.8% in year 2023 and subsequently
expected to rise 3.0% in year 2024. In contrast, advanced economies are expected to
experience a growth rate of 1.3% in year 2023.1
India is now one of the fastest growing, major economies in the world.
Despite a challenging external environment, Indias economy has remained relatively
robust amid global economic headwinds. This buoyant performance along with overall
optimism and compelling macro-economic indicators, exemplify strong economic fundamentals
for the country. Stronger prospects for manufacturing, real estate services, and related
industries, along with improved business and consumer confidence, are expected to support
domestic consumption. Additionally, the nations stable inflation rates, increased
disposable income, and focus on infrastructure development are anticipated to propel
economic growth in the future.
The Indian equity market was muted due to decadal high inflation,
aggressive monetary policy stance by global central banks and Russia-Ukraine crisis.
During the year under review, the S&P BSE Sensex gained 0.72%.
The biggest macro factors influencing the markets include the shift in
the power dynamics fueled by Chinas aggression towards Taiwan, ongoing U.S. - China
conflict for supremacy, the continuing Russia-Ukraine war, the U.S. banking crisis and a
looming recession. The impact of macro factors are expected to be mitigated by positive
domestic factors acting as tailwinds for investors including the near completion of the
earnings cycle, lower than expected inflation, and a pause on rate hikes by the Reserve
Bank of India.
Going into Financial Year 2024, corporate earnings would be key among
the many factors that will decide the market movements. Other major factors to impact
Indian capital markets in the coming year include resurrection in consumption demand,
growth led by policy reforms, move towards digitization and monetary stance of central
banks of major economies, and economic and trade policies. Coupled with strong demographic
dividend and economic growth, consumer demand conditions in the country will remain strong
for a long period. Additionally, stable fiscal situation, moderate inflation rate, exports
growth, rising FDI inflows point towards fundamental stability in the economy, which
augurs well for the capital markets.
It is widely expected that the equity markets to remain vibrant as the
country remains one among the top investment destinations for long term point of view.
Among financial assets, majority of household savings in India are still concentrated in
the form of cash deposits, gold, and real estate. This is in sharp contrast to developed
economies where households rely on a mix of equities, pension products, insurance, and
other financial products. As financial literacy levels improve and per capita savings
increase, the allocation of savings into more financial products such as insurance, mutual
funds and equities is expected to further increase.
1
https://www.imf.org/en/Publications/WEO/Issues/2023/04/11/world-economic-outlook-april-2023
Business Overview and Segment wise Performance:
The Company is engaged in the manufacturing of Electrical equipments
which includes manufacturing and sale of lightning arresters, varistor, secondary surge
arresters, discharge counter, accessories and services in respect thereof; Real Estate
includes development of property and lease of land & premises, Investment activity
includes investment in businesses that provide reasonable returns and good growth
prospects and power generation from Windmill.
The Companys revenue from manufacturing of electrical equipments
has increased from 417.50 Lakhs in Financial Year 2021-22 to 497.24 Lakhs in Financial
Year 2022-23 and revenue from real estate has increased from 6,763.70 Lakhs in Financial
Year 2021-22 to 9,190.71 Lakhs in Financial Year 2022-23 and lastly, revenue from other
activity (includes power generation from Windmill) stood at 59.48 Lakhs during the
Financial Year 2022-23.
The detailed segment wise and product wise performance of the Company
is given in the notes to accounts for the Financial Year ended March 31,2023.
The Company has enough liquid financial resources and strong investment
management team, providing a reasonable income in long term and capital growth
opportunities. The Company manages and monitors liquidity regularly, ensuring that it is
sufficient to meet the Companys objectives.
The Company is continuing its effort to explore new market in
export as well as in domestic market and adopting new technologies.
Strengths:
(1) Diversified Board and Experienced Management Team:
The Company is managed by a team of diversified Board with deep
knowledge of the core aspects of the business. The Company is managed by a team of
competent professionals who helps the Company to achieve its business objectives.
(2) Long term business relationship with the Clients:
The Company believes in maintaining long term business relationship
with the Customers in terms of increased revenues. Our dedicated focus on customer
coverage and our ability to provide timely solutions and faster resolution of customer
complaints, if any, has helped us to establish long term business relationships. This key
strength has helped us to receive repeat business from our customers.
The Company has also successfully built a goodwill in the Indian market
and has developed customers trust over a period of time because of timely execution
of contracts / arrangements with customers, competitive pricing and best customer service.
(3) Talented and Competent Employees:
The Company has skilled and professionally competent employees and
technical team who contribute for the success and growth of the Company.
Opportunities:
The Company is pursuing growth opportunities in various segments in
which it operates. The Company has established a Shopping and Entertainment Mall named
"Elpro City Square Mall" in Pune, Maharashtra, India, which is fully operational
and active. The Company also has a manufacturing unit situated at Pune, Maharashtra, India
which produces Electrical equipments includes manufacturing and sale of lightning
arresters, varistor, secondary surge arresters, discharge counter, accessories and
services in respect thereof. Beside these, the Company had sold substantial portion of its
investment in PNB MetLife India Insurance Company of 1,32,309.54 Lakhs during fourth (4th)
quarter of Financial Year 2021-22. The profit on sale of said investment has been utilized
towards pre-payment of all major outstanding borrowings availed by the Company through
Banks / Financial Institutions and the remaining surplus is being utilized to invest in
Companies which are having good growth prospects and provide reasonable returns to the
Company in long run. The Company has also windmill operations based at Karnataka and
Maharashtra, India.
Considering the above business segments, the Management Team is
optimistic about the Companys future growth and prospects. The Company has ample
opportunity to grow in long run.
Threats:
(1) Potential threat from new players in the industry.
(2) High Volatility in the capital market caused due to unforeseen
events.
(3) Changes in regulatory environment, could sometime cause short term
disruption.
However, the Company has various due diligence systems in place to
mitigate the impact of the threats mentioned above and to ensure transparency and
accountability in the day-to-day business activities.
Financial and Operational Performance:
The key highlights of the standalone financials are given below:
| Particulars |
FY 2022-23 |
FY 2021-22 |
| Total Income |
13,108.56 |
1,26,962.31* |
| Profit Before Tax (after exceptional items) |
5,760.37 |
1,20,443.02* |
| Profit After Tax (PAT) |
4,130.51 |
98,916.15 |
* Includes realization and profits from substantial sale of Investment
in PNB MetLife India Insurance Company Limited Key Financial Ratios:
As per provisions of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the Key Financial Ratios are given below:
| Particulars |
Financial Year ended |
|
Deviations |
Reasons |
|
March 31, 2023 |
March 31, 2022 |
|
|
| Debtors Turnover Ratio (times) |
6.39 |
5.93 |
7.67% |
- |
| Inventory Turnover Ratio (times) |
3.54 |
4.81 |
-26.49% |
The Ratio has declined on account of higher proportionate
rise in inventory during the year |
| Interest Coverage Ratio (times) |
13.95 |
62.60 |
-77.72% |
Higher profit in previous year due to one-time gain on sale
of investments |
| Current Ratio (times) |
1.14 |
8.65 |
-86.76% |
Higher Level of current assets was there in the previous year
on account of money parked in current assets received from the sale of investment and now
the same has invested |
| Debt Equity Ratio (times) |
0.10 |
0.05 |
121.34% |
Increase in debt equity ratio is in ordinary course of
business |
| Operating Profit Margin (%) |
38.57 |
41.52 |
-7.11% |
- |
| Net Profit Margin (%) |
42.38 |
1,365.93 |
-96.90% |
Higher profit in previous year due to one-time gain on sale
of investments |
| Return on Net Worth (%) |
3.33 |
135.29 |
-97.54% |
Higher profit in previous year due to one-time gain on sale
of investments |
Internal Control Systems and their Adequacy:
A separate paragraph on internal financial control systems and their
adequacy has been provided in the Directors Report, which forms part of this Annual
Report.
Human Resources:
The Company has been continuously working to advance human resources
skills, competencies and capabilities within the organization, which are critical to
achieve desired results in line with the strategic business ambitions. The Company
strongly believes that to achieve continual success, a dedicated and devoted workforce is
very much required to get high performance and improved productivity. The Company has left
no stones unturned for enhancing the capabilities of employees across all levels of the
Organization through continuous learning and development programs.
The total employee strength as on March 31,2023 stood at 59.
Cautionary Statement:
Statements in this management discussion and analysis report describing
the Companys objectives, projections, estimates and expectations may be toward
looking statements within the meaning of applicable laws and regulations. Actual
results may differ substantially or materially from those expressed or implied. Important
developments that could affect the Companys operations include a downtrend in the
industry - global or domestic or both, significant changes in political and economic
environment in India, applicable statues, litigations etc.
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