alfa transformers ltd share price Management discussions

ECONOMIC OUTLOOK :

The economy has bounced back in the beginning of the year under review as indicated by various high frequency consumption etc. However, with commodity prices like Oil, Silicon steel, copper/aluminum (for transformers industry) is on the boil resulting the outlook for domestic producers remain gloomy.

The global factors will continue to pose risks to economic growth of the country. The uncertainty arising from ongoing geopolitical conflicts which is reflected in rising global commodity prices, shortage of key inputs, elevated freight cost could have adverse impacts for the economy.

The CAPEX expenditure by the Government of India in development of Infrastructure would trigger the demand of transformers.

INDUSTRY OUTLOOK :

The Government of India has identified the power sector as a key sector of focus to promote sustained industrial growth. Electrification in the country is increasing with support for schemes like Deendayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal Discom assurance yojana (UDAY) and Integrated Power Development Scheme (IPDS).

Indias per capita electricity consumption was 1255 kWh in 2021-22, which is around one-third of the global average of per capita electricity consumption. The Government of India, through Bureau of Energy Efficiency (BEE), has implemented schemes that help in increasing energy efficiency, such as Standards and Label (S&L) Programme, Unnat Jyoti by Affordable LEDs for All (UJALA), Street Lighting National Programme (SLNP), Building Energy Efficiency, Agriculture and Municipal Demand Side Management.

OPPORTUNITIES :

The Company is witnessing gradual improvements in market sentiments with enquiry & order finalization taking measure to ramp up power generation, the future for the Company looks promising.The Profitability of the Company can lead to investment in R&D for development & prototype testing of transformers for Solar & Wind Power. These sectors have huge potential due to less competition which in turn can increase the margin & profitability. The Mining sector which has started operations in the last financial year can lead to the requirement of a large number of specialized transformers. The company is equipped to carter to these transformers.

THREATS :

DUAL AUTHORITY: We are concerned with distribution transformers which are installed networks at 11kv, 22kv and 33kv transmission lines to supply power to user. The distribution transformer business Suffered from challenges last few years emerging from mandatory certification of BIS as per IS 1180 and MEPS through BEE star Programme. These two statutory regulations were not synchronized initially resulting confusion and financial burden. Dual certification and different specification increased the financial burden and created confusion in the mind of both buyer and industrial user alike. Initial absence of clarification on confusion created by these orders caused sis cord and resulted in financial burden to those who follow law and rules and Standards. Enforcing regulation on large number of small and medium industries by two Govt. of India entities is extremely difficult operations by enforcing authorities BIS and BEE because of lack of resources of trained manpower and logistics.

WARRANTY : Discoms are demanding for guarantee period of 3 to 5 years in place 12 to 18 months which is resulting increase in requirement of bank guarantee and repair cost during guarantee period. Most of the utilities have not yet have maintenance schedule of Transformers. Once a Transformer is installed no maintenance like filtration of oil, replacement of gaskets etc. are undertaken. As a result failures are more due to lack of care than manufacturing defects under these circumstances. Demand for guarantee beyond 18 Months has become a great burden on Transformer industry. Our industry is suffering due to lack of sufficient Bank Guarantee limits. We are facing difficulties to take orders for insufficient Bank Guarantee limit. Efforts are being made by ITMA to redress the situation. However Unified oppositions to this unfair treatment are yet to be seen. Besides above, the factors like addition of huge manufacturing capacity of existing units increase in input cost and requirement of working capital will lead to subdued financial performance.

UPGRADATION & REPAIR OF BHUBANESWAR PLANT: The Bhubaneswar plant which had been established way back in 1987 needs holistic approach for equipment refurbishment & repair of the shed. This may necessitate the requirement of term loan in near future

COMPANYS STRATEGY:

• Focus on type testing of various rating of transformers so as to qualify to participate more type of Transformers.

• Empanelment with PGCIL, NTPC, Railways etc. Solar project companies

• Focus on energy efficient transformers& Special Type of Transformers.

• Technological advancement to improve performance parameters and productivity.

• In order to avail the benefits due to present favorable scenario in the market due to increase in demand in Gujarat, the Company has decided to start manufacturing in its Vadodara Unit. Accordingly, the Unit has participated in tender floated by DISCOMs of Gujarat and has procured a small order of Rs. 12.53 Crores from them. After completion of this order, the Company has hopeful to get repeat orders from them.

FOR AND ON BEHALF OF THE BOARD

	Sd/-	Sd/-
PLACE : BHUBANESWAR	DILLIP KUMAR DAS	DEBASIS DAS
DATE : 16th June, 2023	MANAGING DIRECTOR	DIRECTOR