ANNEXURE II TO BOARDS REPORT
INTRODUCTION
The Company is engaged in the business of manufacture of power driven pumps and
industrial valves. Castings are mainly produced for captive consumption.
INDUSTRY STRUCTURE AND DEVELOPMENT
General
The global macro-economic outlook remains uncertain with in ation still out of control
in many key economies. The global growth is expected to be 2.9% in 2023, a drop from the
3.4% in 2022. High in ation, rising interest rates, geopolitical uncertainties and natural
disasters are factors that are driving down the growth expectations. The global in ation
is likely to be 6.6% in 2023, down from the 8.8% in 2022 but still at a high level with
possible upside risks. The serial disruptions in global supply chains due to COVID
followed by the Russo-Ukrainian war and the sanctions are expected to drive energy and
food in ation.
Indian economy is expected to grow by 6.1% in 2023 and by 6.8% in 2024. Despite the
rising interest rates and external headwinds, the domestic demands remain resilient. The
in ation is expected to anchor down to the pre-pandemic levels by the end of 2023. The
broad-based recovery in manufacturing is expected to be driven by the robust domestic
demand. Government focus on infrastructure and the capital investments by private sector
are expected to drive growth in the medium term. The improving investment outlook backed
by Production-Linked Incentive (PLI) schemes for various sectors is expected to draw-in
private investment in the manufacturing sector. Despite the effect of global slowdown on
exports of merchandise and services, the service sector is expected to maintain a healthy
growth rate.
Pumps and valves industries
The focus of government on infrastructure and capital expenditure is expected to
crowd-in private investment benefitting the capital goods industry. Indian pump industry
is one of the fastest growing markets in the world. Government focus on irrigation
projects, drinking water supply, sanitation projects and urban housing is expected to
drive the demand for pumps in the water segment. A series of capacity expansion drives and
green eld projects in the petrochemical, steel, cement and other allied industries will
help the pump and the valve markets.
With the growth in manufacturing, process industries, hospitality and real estate, the
Indian pump market is expected to grow at a sustained pace over the medium term. The
technological innovations in this sector are contributing to the drive towards greener and
sustainable manufacturing.
OPPORTUNITIES AND THREATS
The buoyant market situation owing to the growing demand for our pumps and valves
presents a very good opportunity. The company continues to focus on increasing its market
presence further with expanded network, including a new officein the north-east. We
continue our efforts to identify emerging opportunities and expand our product offerings
to newer market segments. We have launched several new products for re ghting, railways
among other markets. Our dedicated focus on aftermarket segment is helping us enhance our
long-term relationships with customers. We have taken several steps to ensure availability
of spares and service on demand and to capitalize on the aftermarket opportunities.
We have put in place sound mitigation strategies for threats arising out of commodity
prices, competition and exports slowdown. We are allocating necessary resources and
investing adequately to ramp our capacities to cater to the increasing order intake.
SEGMENTWISE PERFORMANCE (Consolidated)
During the year under review, pumps and related spares worth Rs 15,219 Million
(Previous year Rs 12,620 Million) and valves and related spares worth Rs 3,001 Million
(Previous year Rs 2,353 Million) were sold. Out of the above, export of pumps, valves and
their spares in terms of value were Rs 2,551 Million (Previous year Rs 3,025 Million).
OUTLOOK
Owing to the good general economic outlook and a virtuous capex cycle across
industries, the Company expects a healthy growth in the Indian market for pumps, valves
and services. The Exports growth is expected to be slower due to the global slowdown and
the trade restrictions because of Russo-Ukrainian war. The impact of a global slowdown on
domestic consumption in India though limited, can affect the capex projects in private
sector to some extent.
RISKS AND CONCERNS THE MANAGEMENT PERCEIVE
Risks to the outlook are primarily to the downside. With the ever-evolving geopolitical
situation, high in ation prints globally and rising interest rates, the global growth is
vulnerable to a further slowdown. The increased competition in domestic market due to the
exports slowdown is expected to lead to aggressive price competition, impacting the bottom
lines. Prolonged global slowdown risks impacting exports further and may impact the growth
of Indian economy to some extent. The withdrawal of cheaper liquidity may lead to a
slow-down in the capex cycle in the Industry and may hurt the demand for our pumps and
valves.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Internal Control Systems are implemented:
To safeguard the Companys assets from loss or damage.
To keep constant check on cost structure.
To provide adequate financial and accounting controls and implement accounting
standards.
The system is improved and modified continuously to meet with changes in business
condition, statutory and accounting requirements.
Internal controls are adequately supported by Internal Audit and periodic review by the
management.
The Audit Committee meets periodically to review -
Financial statement, with the management and statutory auditors.
Adequacy/scope of internal audit function, significant findings and followup thereon of
any abnormal nature, with the internal auditors.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL EFFICIENCY
Cost reduction have been achieved in certain areas by implementing efficiency
improvement programme within the company.
The following statements cover financial performance review, which are attached to this
report. a) Distribution of income b) Financial position at a glance c) Financial summary
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES, INDUSTRIAL RELATIONS Year 2022 has proven to
be a year of resilience setting multiple records, pivotal moments and achievements. By
keeping the KSBs core sustainability principles like Environmental protection, Social
commitments and Governance Culture (ESG) at center of operations we have attained new
heights in business. We continued to adapt nimbly to serve business by focusing on
enhanced employee engagement and Health and Safety measures. The power to innovate and
embrace change remained the important pillars of our business and with the same focus, we
have implemented measures like restructuring of departments, introduction of new business
segments, investment in expansion of plants & infrastructure, employee friendly
policies, Diversity & Inclusion, Employee Engagement activities, Communication
Meetings with all employees, state of art o ces and enhanced Health & Safety. By
refocusing our business around core strengths we have become significantly more pro table,
better balanced and more cost-e cient. With the execution of our HR strategy, we have been
able to support our employees through the challenging conditions and embarked the high
quadrant in the employee engagement survey. This execution of strategy includes continued
efforts to raise awareness and facilitating open dialogues through several initiatives. We
navigated our efforts on Skill and Knowledge enhancement, Process Improvisation, Retention
of Employees, Leadership Development, Performance Management and Employee Engagement. The
daunting task of maintaining the attrition rate below industry standards was achievable by
fostering pleasant work environment, prioritization of growth of employees, offering
competitive compensation and benefits, Development of Infrastructure, Communication
Mechanisms, Succession Planning and Reward and Recognition. Healthy and cooperative
employee relations at all plants ensured support to the business growth As a result of
these collaborative and collective efforts, we are well-equipped to deliver sustainable
growth and have established us as a strong brand in the market.
CAUTION
This report is based on the experience and information available to the Company in the
pumps and valves business and assumption in regard to domestic and global economic
conditions, government and regulation policies etc. The performance of the Company is
dependent on these factors. It may be materially in uenced by the changes therein beyond
the Companys control, affecting the views expressed in or perceived from this report.
KEY FINANCIAL RATIOS
Key financial ratios of the Company showing financial performance are as under:
| Ratios (Standalone) |
Year Ended 31st December 2022 |
Year Ended 31st December 2021 |
| 1. Debtors Turnover (days) |
83 |
72 |
| 2. Inventory Turnover |
113 |
104 |
| 3. Operating Pro t Margin (%) |
12.40 |
12.16 |
| 4. Net Pro t Margin (%) |
9.88 |
9.86 |
| 5. Return on Net Worth (%) |
17.43 |
16.19 |
| 6. Interest Coverage Ratio (%) |
40.29 |
40.46 |
|
On behalf of the Board of Directors, |
|
GAURAV SWARUP |
|
Chairman |
| Mumbai, 23rd February, 2023 |
|
DISTRIBUTION OF INCOME (STANDALONE)
|
|
|
|
Rs Million |
|
Year ended 31st December, 2022 |
Year ended 31st December, 2021 |
|
Rs |
% |
Rs |
% |
| 1. Raw Materials/Bought-out Components Consumed |
9,880 |
52.90 |
7,924 |
51.66 |
| 2. Excise Duty (till 30th June, 2017) |
- |
- |
- |
- |
| 3. Employee benefits expense |
2,439 |
13.06 |
2,154 |
14.04 |
| 4. Other Expenses |
3,434 |
18.39 |
2,800 |
18.26 |
| 5. Finance cost |
61 |
0.33 |
50 |
0.33 |
| 6. Depreciation |
453 |
2.42 |
436 |
2.84 |
| 7. Taxation |
|
|
|
|
| Current |
538 |
2.88 |
561 |
3.66 |
| Deferred |
76 |
0.41 |
(54) |
(0.35) |
| 8. Other Comprehensive (Income)/Expense |
68 |
0.36 |
(6) |
(0.04) |
| 9. Dividend (including tax thereon) |
435 |
2.33 |
296 |
1.93 |
| 10. Retained Earnings |
1,290 |
6.91 |
1,176 |
7.67 |
| TOTAL |
18,674 |
99.99 |
15,337 |
100.00 |
FINANCIAL POSITION AT A GLANCE (STANDALONE)
|
|
Rs Million |
| CAPITAL |
|
|
|
Year ended 31st December, 2022 |
Year ended 31st December, 2021 |
| ASSETS OWNED |
|
|
| Non-Current Assets |
|
|
| 1. Property, Plant and Equipment (including Capital |
|
|
| Work in Progress and RoU assets) |
3,735 |
3,485 |
| 2. Intangible Assets |
17 |
13 |
| 3. Investments |
63 |
63 |
| 4. Other Non-Current Assets (net) |
562 |
106 |
| 5. Deferred Tax Assets (net) |
167 |
220 |
| Current Assets (Net) excluding borrowings |
6,386 |
5,754 |
| TOTAL |
10,930 |
9,641 |
| FINANCED BY |
|
|
| 1. Borrowings |
- |
- |
| 2. Net Worth* |
10,931 |
9,641 |
| TOTAL |
10,931 |
9,641 |
| *Represented by Equity Share |
|
|
| Equity Share Capital |
348 |
348 |
| Other equity |
10,583 |
9,293 |
| TOTAL |
10,931 |
9,641 |
| INCOME EARNED |
|
|
| 1. Revenue from operations |
18,220 |
14,973 |
| 2. Other Income |
454 |
364 |
| TOTAL |
18,674 |
15,337 |
| INCOME DISTRIBUTED |
|
|
| 1. Materials consumed |
9,880 |
7,924 |
| 2. Employee benefits expense |
2,439 |
2,154 |
|
|
Rs Million |
|
Year ended 31st December, 2022 |
Year ended 31st December, 2021 |
| 3. Other expenses |
3,434 |
2,800 |
| 4. Finance cost |
61 |
50 |
| 5. Depreciation |
453 |
436 |
| 6. Taxation |
|
|
| Current |
539 |
561 |
| Deferred |
76 |
(54) |
| 7. Other Comprehensive (Income)/Expense (net) |
68 |
(6) |
| 8. Dividend (including tax thereon) |
435 |
296 |
| 9. Retained Income |
1,290 |
1,176 |
| TOTAL |
18,674 |
15,337 |
FINANCIAL SUMMARY (STANDALONE)
|
2022 |
2021 |
2020 |
2019 |
2018 |
| CAPITAL ACCOUNTS (Rs Million) |
|
|
|
|
|
| Liabilites |
|
|
|
|
|
| Equity Share Capital |
348 |
348 |
348 |
348 |
348 |
| Other Equity |
10,583 |
9,293 |
8,116 |
7,459 |
6,784 |
| Non-Current Liabilities |
453 |
537 |
462 |
424 |
366 |
| Assets |
|
|
|
|
|
| Non-Current Assets |
|
|
|
|
|
| Gross Block |
8467 |
7805 |
7,482 |
7,184 |
6,615 |
| Net Block |
3,752 |
3,498 |
3,435 |
3,418 |
3,252 |
| Investments |
63 |
63 |
63 |
63 |
63 |
| Other Non-Current Assets |
1,015 |
643 |
381 |
408 |
520 |
| Deferred Tax Assets (net) |
167 |
220 |
168 |
119 |
161 |
| Current Assets (Net) |
6,386 |
5,754 |
4,879 |
4,223 |
3,502 |
| REVENUE ACCOUNTS (Rs Million) |
|
|
|
|
|
| Revenue from operations and Other Income |
18,674 |
15,337 |
12,404 |
13,308 |
11,198 |
| Gross Pro t before nance cost and depreciation |
2,921 |
2,459 |
2,001 |
1,886 |
1,550 |
| Finance cost |
61 |
50 |
34 |
53 |
37 |
| Depreciation |
453 |
436 |
418 |
457 |
397 |
| Pro t before tax |
2,407 |
1,973 |
1,549 |
1,376 |
1,116 |
| Pro t after tax |
1,793 |
1,466 |
973 |
978 |
740 |
| Dividend amount (including tax thereon) |
435 |
296 |
278 |
251 |
243 |
| Retained earnings |
1,290 |
1,176 |
657 |
675 |
507 |
| SELECTED INDICATORS |
|
|
|
|
|
| Return on Capital Employed % |
22.58 |
20.98 |
17.46 |
17.00 |
15.24 |
| Current Ratio |
2.01 |
2.06 |
2.01 |
1.96 |
1.96 |
| Earnings per share |
51.5 |
42.12 |
27.96 |
28.10 |
21.27 |
| Debt equity ratio |
0.00 |
0.00 |
0.07 |
0.08 |
0.06 |
| Book value per share |
314.05 |
276.99 |
243.18 |
224.30 |
204.91 |
| Dividend % |
125 |
85 |
80 |
60 |
60 |
| Fixed Assets Turnover |
4.98 |
4.38 |
3.61 |
3.89 |
3.44 |
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