rmc switchgears ltd Management discussions

TO THE BOARDS REPORT

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STRUCTURE

The Management of RMC Switchgears Limited (‘the Company) presents the analysis of the Company for the year ended on March 31, 2023 and its outlook for the future. This outlook is based on the assessment of the current business environment. It may vary due to future economic and other developments both in India and Abroad.

OPPORTUNITIES AND OUTLOOK

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. The electrical industry has immense growth potential, especially considering the increased penetration of electricity and home improvement drive. Over the years, this industry has evolved rapidly with increasing participation of organised players and gave more emphasis on branding. In this environment, we are very well positioned to deliver accelerated growth with an integrated portfolio that enables us to address the design, build and maintain value chains for clients across industries. We have significantly enhanced our ability to address new opportunities that are now emerging.

The developments have increased the demand for electricity, which has been driving the need for power generation as well as transmission and distribution equipment in India. Consequently, the electrical equipment market growth in India has been substantial.

The objective of this report is to share the managements perspective on the outlook of the business of the Company and the industry in which the Company operates with reference to the external environment; as well as operating and financial performance, risks and opportunities and the adequacy of the internal control systems during the financial year 2022-23. This report should be read in conjunction with the Companys financial statements together with the schedules and the notes thereto. To enable growth, the countrys economy needs the support of its power sector, which is witnessing heavy investments that will enable it to cater to Indias increasing power demand. Indias electrical equipment industry is expected to play a critical role in improving its power infrastructure. Undoubtedly, the health of the Indian electrical equipment industry is of prime importance. The industry faces challenges both domestically and internationally. Low capacity utilisations, especially in the transmission & distribution (T&D) segment, and the growing threat of low-cost imports are some of the key challenges.

RISKS, THREATS AND CONCERNS

We are passing through a challenging business environment and are exposed to various risks and uncertainties like never before. The Company is closely monitoring the situation on a continuous basis and taking proactive steps to mitigate any adverse impact on account of such volatility. The Company has also established a system to closely monitor the financial health of the customers so as to mitigate any possibility of any distress affecting the smooth working of the Company.

FINANCIAL PERFORMANCE

Stringent lockdown, manpower underutilisation, supply chain and logistics issues and health concerns impacted our business operations. We, however, made concerted efforts to not just successfully mitigate risks and protect business but to also support our employees; customers and communities to adapt to the new normal in a sustainable manner.

Changes in Key Financial Ratio

in Lacs

Particulars	2022-23	2021-22
Return On Equity ( Roe) (in %)	181.12	9.47
Current Ratio (in times)	1.65	1.53
Debt Equity Ratio (in times)	0.45	0.76
Net Profit Ratio (in %)	9.37	1.39
Net Capital Turnover Ratio (in	3.82	2.40
times)
Inventory Turnover Ratio (in	8.95	4.13
times)
Trade Receivables Turnover	3.08	1.54
ratio (in times)

Management is continuously taking corrective measures to improve the working of the Company. Continuously taking corrective measures, the same is reflected in the EBITA figure of the . Company whichisimproving year on year

HUMAN RESOURCES

People management is the backbone of your Company and it is regarded as one of the important resources for the success of the Company. The Company strongly believes that the employees welfare, development and performance are important contributors to the Company. The Whistle Blower Policy plays an important role as a watchdog. The Company is dedicated to having an optimum level of human resources and believes in the concept of the right talent at the right job since it considers human capital to be the most valuable asset of your Company. RMC has always stepped up and reviewed its HR policies to ensure transparency, to incorporate its competitiveness in the globally dynamic business environment and to become more powerful and develop itself to be the standard and a successful one. The Human resource managers of the Company have the tools and the opportunity to leverage employee commitment to, and engagement in, the Companys growth strategy.

The Company is proud to have a talented pool comprising professionals from different background with a mix of youth and experience, the leadership and knowledge of the senior management is aligned with the zeal and enthusiasm of the youth brigade. The HR department of the Company was continuously in touch with the employees to guide them and solve their problems. The Company has maintained healthy and cordial industrial relations during the year.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has an adequate internal control system which is commensurate with the nature of its business and the size and complexity of its operations. This internal control system, its adequacy and its effectiveness are periodically reviewed by the Audit Committee. These systems have been designed to ensure optimal utilisation of resources, accurate and timely reporting of financial transactions, compliance with applicable statutes and safeguarding the assets from unauthorised use.

The Audit Committee also monitors the implementation of audit recommendations including those relating to strengthening the Companys risk management policies and systems.

The Company believes in systematic working and placing of proper checks. The Company has a proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, and transactions are authorised, recorded and reported properly. Internal Control is a part of the day-to-day management and administration of your Company. The Company has a proper and adequate system of Internal Control, commensurate with the size, scale and complexity of its operations to ensure orderly and efficient conduct of its business including adherence to corporate policies, safeguarding of assets, prevention of frauds and errors, accuracy and completeness of accounting records and preparation of reliable financial information.

The Internal Audit functions serve to provide independent and objective assurance on the adequacy and effectiveness of the organisations risk management, control and governance processes assess opportunities for improvement in business processes, systems and controls and provide recommendations designed to add value to the organisation and follows up on the implementation of the agreed audit committee recommendations. The Internal Auditor submits detailed reports periodically to the management and the Audit Committee. The Management makes it a point that the Internal Control is brought under regular review and evaluations in consultation with the Internal Auditor. The Audit Committee actively reviews the adequacy and effectiveness of the internal audit functions of the Company and monitors the implementation of the same.

The Committee also calls for comments from the internal auditors about the Companys internal controls, and scope of audit as and when required which gives them an additional insight on the assessment of such controls. Such an adequate internal control system helps in the identification of potential operation processes.

CAUTIONARY STATEMENT

Certain statements made in the management discussion and analysis report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations whether expressed or implied. Several factors could make a significant to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, and natural calamities over which the Company does not have any direct control.

For and on behalf of the Board of Directors Sd/-Ashok Kumar Agarwal Chairman & Managing Director DIN: 00793152

Place: Jaipur Date: 02^nd September, 2023