MANAGEMENT DISCUSSION AND ANALYSIS REPORT
OVERVIEW
For over 70 (seventy) years, we have been serving clients in India and around the world
with end-to-end welding & cutting products and solutions. What makes us unique, is our
willingness to make that extra effort for "Creating the best welding
experience" to our customers.
our goal is to form a sustainable organization that meets the needs of the welding
community, while providing jobs for our citizens and generating wealth for our
stakeholders. Achieving these goals is not simple and we face many obstacles. We have
addressed some of these challenges in this reports "Risk Factors" section.
industry structure and developments
The Welding Industry forms the backbone of the manufacturing sector, which is expected
@ 17% of GDP Welding is critical for many manufacturing processes and the quality of
welding has a direct impact on the quality of the final product.
The last financial year 2022-23 (FY23) commenced with strong expectations of economic
growth, after the massive disruptions witnessed, in the previous years, due to impact of
COVID. The impact of COVID continued to be felt during the initial part of FY23. Global
developments led to supply chain interruptions throughout the year with longer lead times
and higher costs on imports. Strong inflationary trends were witnessed even in locally
sourced raw materials, driven by a surge in Steel prices throughout the year. The Company
continued to focus on product mix and cost reductions to sustain growth and profitability.
Capital goods segment witnessed some revival in activity over the previous years. New
product launches continued to show encouraging results. The Company witnessed reasonably
stable market conditions, despite the volatilities, to achieve growth in sales and
profits.
Significant growth in the manufacturing industries is boosting the markets outlook. In
line with this, rising demand for welding consumables in the energy
sector is fuelling market expansion. other factors, such as, extensive growth in the
automotive industry and various technological advancements, such as the use of dissimilar
metal welding via fibre lasers in the production of electric cars, are expected to drive
the market further in the country. Furthermore, the Indian welding equipment and
consumables market is expected to benefit from the growth of the railway industry and the
mining industry in India.
We have a sizable market share in both, the consumable and equipment markets, and we
are market pioneers in a variety of goods & geographies. We wish to cater to all the
customer needs, with our solutions and products under one roof, through our Welding &
Cutting Automation (WCA) division.
Gross Capital Formation, which represents net investments in Fixed assets, stood at Rs.
51.23 Lakh Crore (US$ 694.70 billion) in Q1 of FY 2022-23. The Government of India aims to
increase the share of manufacturing in GDP to around 25% from 17%. All this augurs well
for the welding industry, which can be expected to grow @ CAGR of around 8-9%, over the
period.
OPPORTUNITIES AND THREATS
The Indian Welding Equipment & Consumables market is expected to grow at more than
7% CAGR from the year 2023 to 2028. India has a large population, which has led to an
increase in demand for housing, healthcare and transportation. This has led to an increase
in demand for welding equipment and consumables in various industries. Furthermore, with
the increasing competition in the market, end-users are now focusing on the quality of
welding equipment and consumables. This has led to an increase in demand for high-quality
welding equipment and consumables that can meet the stringent quality standards. Moreover,
with the increasing number of welding equipment and consumables being used in various
industries, the demand for repair and maintenance services is also increasing. This has
led to an increase in the demand for welding equipment and consumables
that are easy to repair and maintain. In addition, India has a large pool of skilled
and unskilled workers, which has led to an increase in the availability of trained welders
and welding technicians.
The mandatory requirement of BIS marking for products, used in Government Industries,
has opened up the opportunities for "Made-in-India" products and manufacturers
like ADOR, can obtain the BIS certification without any additional investment or efforts,
since its products are already designed and manufactured in India with specifications,
surpassing requirements of the standards.
OUTLOOK, RISKS AND CONCERNS
The last FY23 started on an encouraging note only to run into more turbulence with the
developments arising from the conflict in Europe. Supply chain disruptions have, since
become a key operational challenge, apart from further doses of inflation in commodity
prices. A weaker rupee, higher interest rates and extreme challenges of inflation globally
are key concerns for the ongoing financial year. Despite inherent resilience, the impact
of global developments are bound to affect demand and profitability during the rest of the
year. Opportunities exist in product categories where our new product launches can help
gain market share and in terms of improvements in productivity and costs. A sustained
period of global turbulence and squeeze on liquidity are immediate threats. RBI has shown
intent to keep checks on runaway inflation. It will be important to see how it manages to
continue with its accommodative stance. Even if private CAPEX is affected due to
combination of inflation and rising interest rates, we hope that the Government spending
will continue to boost the economy. Continued focus on infrastructure development has
ensured major markets of welding industries, such as oil & gas, power, heavy
engineering, shipbuilding, railways, automotive etc. with continued growth.
In the Union Budget for FY 23, Finance Minister delivered a growth-oriented budget for
the coming fiscal year. The Finance Minister tried to revitalize the infrastructure sector
in India, in order to, probably, have a multiplier effect on the Indian economy and help
it stay on the path of growth for the coming year. She counted physical infrastructure as
one of the six (06) pillars of her Budget. This should help Welding Industry to grow.
INCOME STATEMENT ANALYSIS
In FY23 overall revenue from operations reached Rs. 77,676 Lakhs from Rs. 66,148 Lakhs
in FY22. This translates to about 17.4% increase from the previous year FY22. Revenue from
consumables business was at Rs. 61,449 Lakhs, as compared to Rs. 53,540 Lakhs in FY22.
Revenue from equipment & automation business was at Rs. 11 ,504 Lakhs, as compared to
Rs. 9,854 Lakhs in FY22. Revenue from Flares & process Equipment (erstwhile project
Engineering Business (pEB)) was at Rs. 4,723 Lakhs, as compared to Rs. 2,754 Lakhs in
FY22. Other income of Rs. 667 Lakhs, mainly consisted of forex gains, interest income,
rental income and export incentive, etc.
BALANCE SHEET ANALYSIS
During FY23, overall working capital days have been controlled at 85 days, compared to
68 days in the previous year, even after significant increase in business and undertaking
a large scale project with longer lead time. The borrowings are under control, with Debt
to Equity ratio of 0.05.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company continues to strongly believe that effective internal controls are critical
for good corporate governance and that the operational freedom in conducting business
should be exercised within the framework of appropriate checks & restraints, subject
to adherence to applicable laws of the land.
The Company has robust Internal Financial Control System (IFCS), which covers the
following critical aspects of business processes and reporting:
1. Financial propriety of business transactions
2. Manufacturing operations and processes
3. Reporting of financial transactions, as per the applicable accounting standards
4. Compliance with the established Company policies, guidelines, and statutes
The Company has a well-defined Internal Audit System. The scope of Internal Audit is
reviewed & finalized at the beginning of every financial year, in consultation with
the Statutory Auditors and approved by the Audit
Committee. The audit plan is focused, primarily, on the following objectives:
• Operational activities
• Management control
• Process efficiency
the Audit Committee reviews the Internal Audit Reports on a quarterly basis and offers
necessary guidance with respect to its coverage, scope & corrective measures.
our ERp & It system makes Finance & accounts Management robust, data tracking
easier and decision making faster.
The Companys software helps in centralizing its order processing, leading to better
logistics / movement of goods. The Company has a very sound compliance track record with
all the Legal and Statutory authorities in the Country, and there is a regular Management
Audit mechanism to ensure that the Company, does not violate any known Legal or Statutory
provisions, applicable to the Company.
"MATERIAL DEVELOPMENTS" IN THE HUMAN RESOURCES FRONT
In FY23, our focus continued to be on working towards achieving our Vision of
"Creating the best Welding Experience" by imbibing three (03) core values of
Enhancing Performance, Building Trust & Relationship and strive to give better
Customer Experience.
We believe that our employees (Human Capital) are our assets and key to the Companys
success. We strive to attract and retain them through various HR policies, learning &
development programs, employee engagement and other employee wellbeing initiatives. The
success of our employees not only benefits the Organization but also our Customers,
Business Partners and Other Stakeholders. Hence, we strive to provide them a happy and
safe working environment. This is obtained through good HR policies and practices. We also
conduct feedback surveys, to actively seek views from all our employees, regarding our HR
practices & policies, with an idea of continuously improving them, in line with the
expectation of majority, if not all.
We have laid emphasis on creating culture of performance, transparency and well-being
of our employees. A good & positive working environment enables learning and growth
for the employees. In last FY23, we could conduct classroom training sessions and also
sent our senior employees to some classroom programs of reputed Business Schools, since
COVID-19 impact had subsided. Several technical & behavioral development programs were
conducted, to train the managers and other employees, apart from the regularly conducted
on-the-job and other technical trainings.
We will continue to keep our focus on retaining and attracting best talents and strive
to do even better to achieve our vision.
The employee strength as of 31st March, 2023 stood at 596.
Disclaimer:
The information and opinion expressed in this section of the Annual Report may contain
certain forward looking statements, which the Management believes are true to the best of
its knowledge, at the time of its preparation. The Company and the Management shall not be
held liable for any loss, which may arise, as a result of any action taken on the basis of
the information contained herein.
|
For and on behalf of the Board |
|
Ninotchka Malkani Nagpal |
| Place: Mumbai |
Executive Chairman |
| Date: 30th May, 2023 |
(DIN: 00031985) |
+91-9892691696
