INDIAN ECONOMY
Indian economy continued to be one of the fastest- growing major
economies despite growing at an estimated 7.2% in FY23 and has shown higher resilience to
global shocks on the back of strong government capital spending and private demand.
According to the second advance estimates released by the National Statistical Office
(NSO) in January 2023, Indias real GDP growth for FY-23 is placed at 7%, driven by
private consumption and public investment. Although the world economy faced multiple
challenges such as escalating geopolitical tensions, constrained supply chains and high
inflation, India proved to be an outlier, demonstrating resilience and growing by 7.2% GDP
during FY 2023, aided by strong private consumption, growth-supportive policies and
continued government spending on infrastructure and logistics, among others. The Indian
economy looks to have moved on ahead of many nations after Covid-19 pandemic and
positioning itselfto ascend to the pre-pandemic growth path in FY-23. Indias
recovery from the pandemic was relatively quick and growth in the upcoming year will be
supported by solid domestic demand and a pickup in capital investment. The current growth
trajectory is also well supported by various initiatives and changes that have been
implemented by the government over the past few years. While global economic growth is
expected to moderate in 2023, India is likely to grow further, the fastest among major
economies in the world and continues to remain a bright spot amidst global uncertainties.
Increased infrastructure spending along with various supportive measures by the government
is likely to enhance private investment and increase in manufacturing activities. The
rapidly growing domestic consumer market as well as the large industrial sector have made
India an important investment destination for a wide range of multinationals across
manufacturing, infrastructure and services. Further, India is fast becoming the start-up
capital of the world, attractive sizeable foreign investments. The growth dynamics remain
strong and economic growth momentum is likely to be boosted by growth in services
activity, uptick in government capital expenditure and pick up in manufacturing activity.
The Production Linked Incentive (PLI) scheme announced by the government is strengthening
the countrys manufacturing sector and also creating enormous employment
opportunities. Make in India and digital India initiatives are accelerating economic
growth, changing the retail consumer market landscape and attracting leading
multinationals in technology and e-commerce to the Indian market. INDUSTRY OUTLOOK AND
OPPORTUNITIES
Infrastructure industry has prominent role in nation building by means
of offering quality roads, flyovers, bridges, railway tracks, airports, seaports, railway
stations, high-rise office, residential or government buildings, etc. Building
infrastructure is a major driving force that accounts for the countrys economy and
growth. The industry not only employs a large number of people but also contributes
significantly to the nations economy. The infrastructure created by Indian
construction companies goes a long way in empowering the countrys economic progress.
Major development is expected in co-related sectors and it will lead to the growth of the
building materials industry. A few of the areas that will see a positive increase are
social infrastructure, educational institutions, hospitals, government accommodation and
defence infrastructure and water resources. Moreover, high investment in the industry is
also one of the key factors that will contribute to the growth of building materials. The
Government of India continues to prioritize the affordable housing segment and parallelly
looking at ways to strengthen the existing financing systems to provide liquidity to stuck
real estate projects. Steel drums are playing a vital role in packaging industries and are
extensively used for transportation of various products. The steel drums market is also
expected to grow on account of the raising application across several industrial verticals
such as chemical and pharmaceuticals, paints, oil and lubricants, food and beverages. The
market growth for steel drum seems to remain sizable in the forecast period considering
the benefits provided by steel drum for storing and shipping hazardous & non-
hazardous materials. Increasing environmental growth and safety and sustainability of
products has compelled the manufacturers to adopt new packaging standards and raised
demands of steel drums among the end users. Considering all the benefits of a
cost-effective steel drum, the overall market growth is estimated to uplift in future and
witness at a prominent growth rate which enables more opportunities to improve the steel
drum market in the next five years. Water treatment chemicals are widely used in the
various end-user industries such as chemicals, petrochemicals, power generation and
others. These end-user industries generate wastewater from their facilities as a
byproduct, which needs to be treated before reuse or disposing of, considering the longer
shelf life of the equipment and to protect the environment. The India water treatment
chemicals market is segmented by product type and end- user industry. By product type, the
market is segmented into biocides and disinfectants, coagulants and flocculants, corrosion
and scale inhibitors, defoamers and defoaming agents and by end-user industry, the market
is segmented into power generation, oil and gas, chemical, food and beverage, pulp and
paper. To minimise wastage of water and to protect the environment, the demand for supply
of water treatment chemicals is expected to grow further. Power & Control Systems
plays a prominent role in the energy generation, manufacturing, and process industries.
Industrial control systems maximize the efficiency of equipment, thereby enhancing its
productivity. Factors such as an increase in power consumption, rise of an influx of
renewable sources in the energy mix, and renovation, modernization and upgradation of
aging power plants are expected to drive the market in the forecast period. The rise in
dependency on distributed energy development is likely to restrain the growth of the power
plant control system market in the coming years. Globally, the focus has increased on the
adoption of automation technologies in industrial manufacturing sector to increase
productivity and efficiency. As a result, the up-gradation of existing facilities is
likely to create an excellent opportunity in control systems market in the future. The
power & control systems market is expected to witness significant market growth across
the country. OPERATIONAL AND FINANCIAL PERFORMANCE
Standalone
During the year 2022-23, the total revenue of the Company was 44550
Lakhs as compared to 344883 Lakhs for the previous year 2021-22. Profit before tax for the
year 2022-23 was 31983 Lakhs as against 7490 Lakhs in the previous year. Building
Materials division has posted a total revenue of 335868 Lakhs and a net profit of T407
Lakhs in the current year as against 35382 Lakhs and 938 Lakhs respectively in previous
year. Power & Control Systems division has posted a total revenue of 32967 Lakhs as
compared to 72650 Lakhs in the previous year. The net profit was 7544 Lakhs when compared
to 7413 Lakhs in the previous year.
Industrial Packaging division has posted total revenue of T4041 Lakhs
this year as compared to 34946 Lakhs in 2021-22. The net profit of this division for the
current year was I649 Lakhs as compared to 7489 lakhs previous year. Speciality Chemicals
division has posted a total revenue of IT 1024 Lakhs as compared to I 852 Lakhs in
2021-22. The net profit of this division for the current year was I 224 Lakhs as compared
to T 168 Lakhs in previous year. There is no revenue from operations of Engineering
division this year due to lack of orders. This division has posted a total revenue of I5
Lakhs and a net loss of 39 Lakhs for the year 2022-23 as against the total revenue of 7518
lakhs and net loss of 342 Lakhs for last year. KEY FINANCIAL RATIOS
Details of significant changes in key financial ratios (Change in 25%
or more) as compared to the immediately previous financial years.
| Particulars |
Details |
RIGHT>Detailed Explanation |
| Inventory Turnover |
35% |
Increase in Inventory due |
|
|
to increase in Lead Time |
| Debt Service |
108% |
Due to exceptional Income |
| Coverage Ratio |
|
in the current year. |
| Current Ratio |
- |
Change is less than 25% |
| Debt Equity Ratio |
- |
Change is less than 25% |
| Return on Equity |
1568% |
Due to exceptional Income |
| Ratio |
|
in the current year |
| Operating Profit |
- |
Change is less than 25% |
| Margin (%) |
|
|
| Trade receivables |
- |
Collection of receivables is |
| turnover |
|
better and efficient |
| Trade payable |
- |
Change is less than 25% |
| turnover |
|
|
| Net Profit Margin(%) |
1586% |
Due to exceptional income |
|
|
in the current year |
| Return on capital |
173% |
Due to exceptional income |
| employed |
|
in the current year |
| Return on |
1612% |
Due to exceptional income |
| investments |
|
in the current year |
Consolidated
During the year under review, the Revenue from Operations of the
Company on a consolidated basis for the year 2022-23 amounted to 790349 lakhs as against
84474 Lakhs in the previous year and the profit before tax was 32164 Lakhs as against 7501
Lakhs in the previous financial year. The total revenue of wholly owned subsidiary M/s.
Danish Steel Cluster Private Ltd for the year 2022-23 was 355 Lakhs as against the total
revenue of 3607 Lakhs for the previous year. During the year under review, the above
subsidiary company has recorded a total loss of 31.78 Lakhs as against 3651 Lakhs. The
total revenue of wholly owned subsidiary M/s. Wilson Cables Private Ltd for the year
2022-23 was 345707 Lakhs as against the total revenue of 339300 Lakhs for the previous
year and the profit before tax was 3190 Lakhs as against 3115 Lakhs in the previous
financial year. The total revenue of wholly owned subsidiary M/s. South India House
Estates & Properties Ltd for the year 2022- 23 was 744 Lakhs as against the total
revenue of 313 Lakhs for the previous year. The total loss for the year was I6 Lakhs as
against the loss of 729 Lakhs for the previous year. HUMAN RESOURCE DEVELOPMENT
Human resources are vital for building, strengthening, and fostering a
healthy organisational culture. Thereby, the Company ensures that its Human Resources
department remains in sync with our organisational goals. Sicagen is focused on developing
expertise and skills among its employees and its personnel policies are aimed at
recruiting talented individuals and promoting the development of their skills. With a
strength of 267 permanent employees including 22-woman employees as on 31st March 2023,
the Company depends on its teams skills and hard work to execute development and
growth while maintaining the highest standards of health and safety. At Sicagen, the
Company encourages diversity and strive to create a culture that values mutual respect.
This enables employees to take an active at workplace, encourages personal development,
fosters diversity of values and a pleasant working environment that is free of
discrimination and harassment. The Company is determined in creating strong and long- term
relationship with all employees. The Company takes every care of its employees for
development by providing ample opportunities to prove their talent and efficiency and grow
with the Company. The work culture created by the management provides safety, good health,
development of talent, quality of life of all the employees. Periodical meet with the
employees of all branches is conducted focusing on aspects relating to employee
productivity, talent management, capability development to enhance employee morale.
INTERNAL CONTROL SYSTEM
The Company has a well-established internal financial controls
framework, which is designed to provide a high degree of assurance and continuously assess
the adequacy, effectiveness and efficiency of operations, the reliability of internal
financial controls. The Companys internal auditors are carrying out periodical audit and
placing their reports before the Audit Committee with their observations. Audit Committee
reviews the internal audit reports, financial, risk management system, reports to the
Board. Proper control mechanism and the follow- up actions are taken wherever necessary
pursuant to the audit observations. To maintain an effective internal control systems and
also to ensure effective accounting and financial data, an Oracle EBS suit 12.2.10 with
19? upgraded version was implemented. The in-built Oracle system developed by the
Management takes care of complete control over financial framework of the Company. The
management is always committed to ensuring an effective internal financial controls
environment, commensurate with the size and complexity of the business, which provides an
assurance regarding the reliability of financial reporting and the preparation of
financial statements in accordance with generally accepted accounting principles. RISK AND
CONCERNS
The Company identifies major risks and concerns affecting its business
which are mainly associated with various external factors. Major external risk may arise
because of the price variation, market fluctuation, credit offering, liquidity position,
demand and supply, changes in government policies, banking regulations and tax rates etc.
Hence the Company has put in place an effective risk management system to monitor and
avoid those risks and take aggressive steps to overcome the challenges by offering value
added services to its esteemed customers. Since the Company being one of the major players
in trading and distribution of building materials, it always ensures that the risk
management process is also an integral part of its business plan and it involves a
systematic approach to identify, assess, manage and monitor risks that can affect the
organisations ability to achieve its objectives. Appropriate steps are taken to
strengthen the existing business practices and policies to the overcome the challenges.
Procurement of materials and inventory management processes are reviewed continuously to
mitigate the risk of price changes in the volatile market. Efforts are also made by the
Company to increase the top line and profitability; strict credit policy measures are
initiated to lower the market exposure. Improvement of customer service are always planned
across the branches by offering value added services.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis Report describing
the Companys structure, challenges, outlook, financials and HR policies may be
“forward looking statements” within the meaning of applicable securities law and
regulations. Actual results may differ materially from those expressed or implied.
Important factors that could make a difference to the Companys operations include
economic conditions affecting demand and supply and price situations in the domestic and
overseas market in which the company operates, changes in the Government, laws, rules,
regulations and other statutes and other incidental factors.
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