jyoti ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure and Developments

Jyoti Limited is a leading engineering ISO-9001:2008 certified Company, serving the core sectors of Power and Water. It offers a wide range of reliable quality hydraulic and electrical products and services. From providing customized solutions to handle liquids, Jyoti, over the years has emerged as a Total Solution Provider by designing and manufacturing wide range of pumps and EPC Pumping Systems by undertaking turn-key projects from concept to commissioning.

The Company has taken several bold steps to remain competitive and to ensure survival by reducing cost and streamlining the overall operations process.

Opportunities and Threats

As India is slowly but steadily moving towards development under the present Government, Power and Water sectors are prime movers for its economic and social development and growth. Considering the 80 year-old presence of the Company in the Power, Hydel and Lift Irrigation sectors, which are of National Importance, a huge business potential is anticipated. Since these sectors are the backbone of a developing nation, stable growth of the Company is expected.

The Company continues to be very selective in taking orders as the price realisation still remains very low. The challenge to manage the orders within the budgeted costs continues and high volatility in the prices of major raw materials is a matter of concern.

Barring unforeseen circumstances, the Company expects to increase its volume of business in the current year. The Company continues to strive to make all efforts to grasp the upcoming opportunities that the challenges are throwing up, with the firm belief that the trying circumstances bring out the best in us.

Outlook

Water and Power sectors are of National Importance, and for a developing country like India, the demand for energy and water is expected to grow at a steady rate. Due to continued electrification of the global economy, a large portion of that demand growth will come from the power industry. Keeping in view the above, the long term outlook for these sectors appears to be bright. There is ample scope and opportunity for companies having businesses in these sectors not to mention the potential of your Company and its large presence in these sectors for many years.

Risk and Concerns

It must be clearly understood that each industry in particular and each industry segment in general has its own risk, from which it cannot be fully isolated but mitigated by means of proper risk management. Your Company foresees certain areas of risk, concerns and threats in its arena of operations.

The present challenge for the Company is to successfully execute low price orders, within the budgeted cost and to avoid significant time and expense overruns ensuring that timely project completion is possible. The availability and cost of the funds remain very important factors impacting on the plans of the Company and threatening the viability itself. Unless the Government takes strong measures to boost the industrial activity and stimulate the industries by reducing the interest rates and making funds available, it will be difficult for the Capital Goods Industry in India to achieve the targets. Financial risk such as timely servicing of interest and debt repayment remains extremely vital for the Company along with availing funds at cost effective rates that are feasible by the Company. Project execution is largely affected by non-availability of skilled and unskilled manpower. Competency-management and retention of employees is becoming increasingly critical. EPC Projects are generally exposed to risk of delay in execution due to factors like right of way, obtaining of various approvals in time, environmental factors and resistance from locals, etc.

Segment-wise Performance

This is not applicable to the Company as there is only one identified reportable segment.

Internal Control Systems

The Company maintains adequate and effective internal control systems commensurate with the size and complexity. It also ensures that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss. In the opinion of the Management, the Company has adequate internal audit and control systems to ensure that all transactions are authorised, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the management and Audit Committee. The observations and comments of the Audit Committee are placed before the Board.

Financial Performance and Operational Efficiency

The Companys revenue from operations was Rs.154.55 crores in the Financial Year 2022-23 as compared to Rs.120.24 crores for the previous year. The Company is continuing various corrective measures to reduce the material cost and other overheads. The Companys EBITDA was Rs.8.68 crores in the Financial Year 2022-23 as compared to Rs.4.80 crores during the previous year. The Profit for the year before exceptional items was at Rs.9.92 crores as compared to Rs.6.09 crores for the previous year.

Details of Significant Changes in the Key Financial Ratios & Return on Net Worth

Pursuant to amendment made in Schedule V to the Listing Regulations, details of significant changes (i.e. changes of 25% or more as compared to the immediately previous financial year ) in Key Financial Ratios and any changes in Return on Net Worth of the Company ( on standalone basis ) including explanations therefore are given below:

Sr. No.	Particulars	FY ended 31st March, 2023	FY ended 31st March, 2022	Explanations
i	Debtors Turnover Ratio	0.95	0.58	Ratio shows improvement in view of overall improvement in operations, liquidation in inventory & release of outstanding receivables.
ii	Inventory Turnover Ratio	10.25	8.10
iii	Current Ratio	1.03	1.61	Due to increase in repayment of dues, being part of Current Liabilities.
iv	Debt Equity Ratio	-3.45	-3.46	-
v	Operating Profit Margin (%)	5.62%	3.99%	Ratio shows improvement in view of improved operations with profits.
vi	Net Profit Margin (%)	2.70%	1.22%
vii	Return on Net Worth (%)	-5.94%	-2.33%

Human Resource

The Company considers its employee as Key Assets. It has adopted people practices that enable it to attract and retain talent in an increasingly competitive market; and to foster a work culture that is always committed in providing the best opportunities to employees to realize their potential. It is committed as an equal opportunity Employer.

The Company has undertaken continuous interaction with all employees from project site Visits to digital platforms. This ensures ownership and empowerment of our employees all the way down to its frontline facing Staff.

Jyoti Limited has a strong orientation to learning and development. All Employees, from a new joiner to a tenured one are provided tailored learning opportunities as per their role, level and specific focus area.

For Career Development at the early stages, the focus is on making the employee role ready through functional knowledge and skill development, moving to managerial capability building at mid levels and leadership at senior levels.

The Company provides its employees opportunities to learn, grow and take their career forward through internal job posting to acquire multi - disciplinary skills to sharpen their career. This also leads to development of well rounded talent for the company.

The well-being of employees has always been at the centre of our philosophy.

The Company has a total manpower of 193 as on 31^st March, 2023.

Cautionary Statement

The statements in the Boards Report and the Management Discussion and Analysis describing the Companys objectives, explanations and predictions, may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statements. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical materials and their cost, changes in government policies and tax laws, economic development of the country, and other factors which are material to the business operations of the Company.