precision wires india ltd Management discussions

a) Industry Structure & Development:

The Company produces Winding Wires made of Copper which are used in the manufacture of both rotating and static electrical equipments. Though there are a number of players in the industry including many in the SSI and MSME sector, quality of our products and long-standing relationships with our customers, we continue to remain Industry Leader and the preferred choice for demanding customers. Your Company primarily caters to the OEM Sector.

For the electrical Industry in general and Indian Economy it was normal operation during the Year. The production and sales were marginally higher. Domestic competition continues to be sever.

Civil works for the new expansion project is completed. Some Imported and domestic equipments received and have been commissioned. More equipments are expected during Q1 and Q2 of FY 2023-24. Project cost envisaged is Rs. 70 Crore. The benefit of enhanced capacity may commence in phases from Q3 and Q4 of FY 2023-24, with estimated increase in capacity of about 9000 MT/per year. A term loan of Rs. 35 Crore has been sanctioned by HDFC Bank for the said project.

The Winding wire division of Palej plant, Dist-Bharuch was closed since about FY 2010-2011 and during the year equipments thereof have been scrapped. Production of resins/varnish at our Palej plant marignally increased.

Export of finished goods were comfortable during the year.

The Company managed the Volatility in the price of Copper, inputs and foreign exchange well.

Ocean freights rates have softened. However we faced inflation in the cost of insulating varnish, polymers, chemicals, plastic, fuel, domestic transport and packaging material, power tariff in our area also went up.

All the above factors could cause short- and medium- term pressure on Indian economy. However longer- term picture for India and our Industry remains bright.

b) Opportunities and Threats:

India will continue to invest substantially in infrastructure such as roads, power generation, transmission and distribution and digital economy which will improve overall connectivity and spur development ofsemi urban and rural areas. Health and Safety are now high priorities in the minds of the consumer.

In the long term, demand for Electrical Equipments, Appliances, Air Conditioning, Refrigeration and Automotive Sector will improve steadily due to these trends. Our products are used primarily by all these sectors including Infrastructure, which needs continuous long term investment. Electrical Industry in India is well developed and Export prospects will improve as western economy may seek to import more from our Country. Due to enhanced energy efficiency norms for electrical equipments, faster adoption of electric/hybrid vehicle technology in the automotive sector, old vehicle scrapping policy of the government and specific incentives given by the government for "Make in India" schemes, the long term prospects are bright.

Global Geo political Situation has created challenging opportunities for Indian Industries. PTA with UAE is likely to benefit Indian both in terms of Exports and Imports.

Copper prices have been very volatile with lots of fluctuation in FY 2022-23. This volatility is expected to continues in the current year, due to global uncertainty. In FY 2022-23, the Indian rupee weakened by about 7% v/s USD and further weakening could occur in FY 2023-24. We expect interest rates to remain high. Inflation has softened recently. The Ukraine conflict and lower demand of highly industrialized nations continues to exert pressure on the global economy. Competition in our industry will continue to be intense. High interest rate coupled with inflation and volatility may exert pressure on the Indian economy for at least another year. Competition will continue to be intense. But due to our low debt gearing ratio, good liquidity, long experience in the industry, we are better placed and look forward to perform well in the long term, barring any unforeseen developments. As matter of policy and safeguard, so as to avoid market risk, your Company generally enters into back-to-back transaction for input Copper Purchase against the sales orderoffinished goods.

In the longer term, the global themes of Energy Efficiency and reduction of Carbon emissions will play in favour of our industry. Electric Vehicle development is at a very early stage in India but is expected to pick up significantly during this decade-initially mainly in two and three wheelers and thereafter also four wheelers. The Government thrust on Energy Efficient Electrical Equipments would spur replacement demand of Older less efficient equipments. After initial short-term phase of Covid-19 pandemic, income has rise and change in lifestyles will spur demand for Refrigeration, AirConditioning, Home Appliances and Automotive Sectors. Our Company will focus on prudent and timely capacity enhancements and modernization, Quality and Process up gradation, Consolidation, Rationalization of Costs and De-risking of all our processes and operations.

c) Segment-wise or Product-wise performance:

The Companys core activity is production and sale of only one product i.e. Winding wire of various types made Copper. Price of our primary input, Copper, during the year was much higher. Volumes were also higher due to post COVID recovery. The PBDIT for the FY 2022-23 were higher as compared to previous year, however PAT is marginally less as compared to FY 2021-2, due to higher Financial cost.

d) Outlook:

The outlook of the economy for the rest of the current year is challenging due to high inflation and interest rate and uncertain global economic environment, which could affect the demand in the Indian economy.

Long term outlook for India and our Industry continues to be bright.

e) Risks and Concerns:

Please referforegoing paragraphs

f) Internal Control Systems and their adequacy:

Commensurate with the size of your Company and nature of its business, your Company has adequate internal control procedures and regular Internal Audit systems. This has been confirmed by the Auditors in their report to the members.

g) Discussion on Financial Performance with respect to Operational Performance (all figures rounded off in Rupees Lakhs only): (Previous Years figures restated as per IND AS as applicable)

Production and Sales were during the FY 2022-23. PBDIT was marginally higher as Compared to FY 2021-22. Profit after tax for FY 2022-23 was marginally lower due to higher finance cost consequent to the increase therein from time to time by the Banking Industry. Your Company has paid an average dividend of 64% during last decade. Our reserves and surplus (excluding revaluation reserves) is 43244 (35332). Our key operating ratios are healthy. Our debt equity and current ratios are comfortable.

During the year under review Inventories and Trade Receivable despite higher production are in control at 22730 (22180) and 45935 (47650) respectively. Trade Payables are lower at 43223 (46752). Non current borrowing 1409 (383) gone up due to additional borrowing against the HDFC term loan for implementation of ongoing project.

Two installment of interim dividend aggregating to 60% have been declared and paid during the year. A final dividend @ 36% have been recommended to the members of the Company for their approval at the ensuing Annual general Meeting. The total dividend for the FY 2022-23 shall stand at 96% on fully paid up equity shares of Rs.1/- each.

h) Material Developments in Human Resources/lndustrial Relations including number of people employed: Industrial Relations during the year were generally satisfactory.

i) Cautionary Statements:

Statements in this Management Discussion and Analysis describing the company objectives, estimates and expectations may be Forward Looking statements within the meaning of applicable laws and regulations. Actual performance may differ substantially or materially from those expressed or implied.

For and on behalf of the Board