Global Economic Overview
Global goods trade growth slowed in the first half of 2023 in tandem with weakening
global industrial Production Pressures on global supply chains have abated as goods demand
has weakened and global shipping conditions have improved. The global supply chain
pressures index and suppliers delivery times reached their lowest levels in almost four
years in the first half of 2023 and are expected to remain low.
During the pandemic, trade growth was supported by a shift in the composition of demand
toward tradable goods and away from services, which are less trade-intensive.
The gradual rotation of demand back to its pre-pandemic composition is now slowing
trade growth as is the fact that the recovery in China is expected to be predominantly
driven by services, which will limit positive spill overs to its trading partners through
demand for goods and commodities. The growing number of restrictive trade measures
reflects a rising degree of geopolitical tensions and attempts by some major economies to
follow more inward-looking policies. In the longer term, this will likely reshape global
supply chains and increase trade costs.
As the global consumption pattern gradually reverts to its pre-pandemic balance between
goods and services, trade is expected to recover to 2.8% in 2024, showing a modest
improvement aligned with GDP growth. The trade outlook is subject to various downside
risks, including weaker-than-expected global demand, tighter global financial conditions,
worsening trade tensions between major economies, mounting geopolitical uncertainty.
Global inflation
Persistent high inflation in advanced economies seems to be primarily fuelled by excess
demand, as supply chain pressures ease and energy prices decline. However, there may still
be lingering constraints on supply capacity that contribute to the inflationary pressures.
In Europe, the role of energy prices is particularly significant, as the pass-through of
these costs into overall prices could further contribute to inflation persistence. The
sunsetting of fiscal programs that have mitigated price spikes for end-users may
exacerbate this situation. Furthermore,the absence of economic slack may empower firms and
workers to exert pricing power, resulting in inflation becoming more responsive to changes
in economic activity. (Source World Bank Group June 2023)
Global trade remains under pressure due to geopolitical tensions, weakening global
demand and tighter monetary and fiscal policies.
Overview of the Indian Economy
Indias robust economic growth in the first quarter of FY 2022-23 propelled it past the
UK, securing its position as the worlds fifth-largest economy. Overcoming the challenges
posed by successive waves of the COVID-19 pandemic, India has shown remarkable resilience.
Notably, the real GDP in the first quarter of 2022-23 stands at approximately 4% higher
than the corresponding period in 2019-20, indicating a strong and promising start to
Indias recovery from the pandemics impact.
With the pent-up demand being unleashed and the widespread vaccination coverage, it is
expected that the contact-intensive services sector will be the key driver of Indias
economic development in 2022-2023. This sector, benefiting from increased consumer
spending and improved confidence, is poised to play a significant role in Indias overall
economic resurgence. (Source https://www.ibef.org)
The Economic Survey mentioned that National Logistics Policy would ease the domestic
frictions to encourage Indian exports by reducing the cost of internal logistics. It also
says that the latest Free Trade Agreements, such as with UAE and Australia, would address
the external frictions by creating opportunities for exports at concessional tariffs and
non-tariff barriers. Thus, the whole ecosystem would evolve in an export-friendly manner
over time.
The Economic Survey observes that apart from the elevated crude oil prices, the revival
of economic activity contributed to an increase in imports. Petroleum, crude &
products; electronic goods; coal, coke & briquettes, etc.; machinery, electrical &
non-electrical and gold were among the top import items. It mentions that while continued
softening of the global commodity price outlook would assist moderate imports going
forward, non-gold, non-oil imports may not decelerate significantly.
India has the potential to cater to the global demand for several products in a cost
effective manner.
Economic Survey tabled in the Parliament stated that Industry sector withessed modest
growth of 4.1 per cent in FY23 compared to the strong growth of 10.3 per cent in FY22. It
explained that this is likely on account of input cost-push pressures, supply chain
disruptions and the China lockdown impacting the availability of essential inputs and
slowing the global economy.
The Survey highlighted that the PLI schemes are set to unlock manufacturing capacity,
boost exports, reduce import dependence and lead to job creation for both skilled and
unskilled labour. The Survey was optimistic that easing input prices and conducive demand
conditions will support overall Industrial growth. (Source Economic Survey 2023)
Coal Industry Overview
Government of India has been placed in a better position to caterto excess energy
demand. It further added that the coal industry is expected to grow at 6-7 per cent
annually to reach a production level of 1 billion tonnes by FY26 and about 1.5 billion
tonnes by 2030.
Coal demand grows across much of Asia due to its affordability and availability. India
sees the largest increase of any country, although the rate of growth is slowing, dampened
by a large-scale expansion of renewables and the use of supercritical technology in new
coal power plants. Significant increases in coal use are also expected in Indonesia,
Vietham, Philippines, Malaysia and Pakistan.
Coal in China accounts for ~14% of global primary energy, the largest around in the
world. Developments in the Chinese coal sector have the potential to affect coal, gas and
electricity prices across the world, for instance through inter-fuel substitution or
regional arbitrage. This puts Chinas coal sector at the centre of the global energy
stage. While China accounts for nearly half of the worlds coal consumption, its clean-air
measures are set to constrain Chinese coal demand going forward. We forecast Chinese coal
demand to fall by around ~3% over the period.
Meanwhile, in a growing number of countries, the phase out of coal-fired generation is
a key policy goal. But market trends are proving resistant to change.
The story of coal is a tale of two worlds with climate action policies and economic
forces leading to closing coal power plants in some countries, while coal continues to
play a part in securing access to affordable energy in others,” said Keisuke
Sadamori, Director of Energy Markets and Security at the IEA. “For many countries,
particularly in South and Southeast Asia, it is looked upon to provide energy security and
underpin economic development.
Global Investment in coal to rise
When looking at whats ahead for the sector, China and India are likely to boost
domestic coal production, which could have a bearish impact on US seaborne coal demand,
according to S&P Global Commodity Insights.
Investment in new coal-fired power plants remains on a declining trend, but a warning
sign came in 2022 with 40 GW of new coal plants being approved the highest figure since
2016. Almost all of these were in China, reflecting the high political priority attached
to energy security after severe electricity market strains in 2021 and 2022, even as China
deploys a range of low-emission technologies at scale. Robust coal demand and high prices
during the global energy crisis are also feeding through into higher global investment.
Coal investment increased to USD 135 billion globally in 2022 and is expected to rise to
nearly USD 150 billion in 2023. Nearly 90% of this investment takes place in the Asia
Pacific region, notably in China and India where both countries have looked to expand
production and develop new coal mines.
Global coal demand reached an all-time high in 2022, with prices rising to
unprecedented levels in October 2021 and reaching record highs on several occasions in
2022. Globally, coal investment increased to USD 135 billion in 2022, a 20% increase on
2021 levels. Almost 90% of investment occurred in the Asia Pacific region, predominantly
in China and India.
The majority of coal investment in 2022 was used to maintain production at existing
mines, with smaller amounts used to expand production at brownfield developments. New
greenfield projects are limited in most parts of the world amid investor and company
concerns over the impacts of coal on climate change, environmental social and corporate
governance issues, slow permitting and public opposition limiting the availability of
finance. The exception to this is China and India, where energy security concerns and
power shortages have led to the development of new mines as well as the expansion of
existing mines.
India is expected to see the largest increase in coal demand, followed by the EU at ~6
percent and China at ~0.4 percent.
What is the reason for increasing coal demand?
• A shortage of natural gas due to Russias invasion of Ukraine was
the primary reason for coal demand soaring, with a 2% increase in coal use for electricity
production.
• Despite bold climate pledges from a plethora of major world powers,
it seems that many are unable to break their addiction to coal, as consumption is set to
hit an all-time high.
• Several countries have launched climate strategies that include the
phasing out of coal production and use over the coming decades, however with gas shortages
and a long road to getting enough renewable energy operations running to meet global
demand, many continue to rely on coal for power and industry.
• Iron and steel production uses coal and there are not many
technologies to replace the fuel immediately. One can say that coal is backbone of both
the steel and cement industries.
• Continued expansion of Indias economy is expected during
2023-2024, with annual average GDP growth of 6.3 %, fuelled at least partially by coal.
• Indias push to domestic coal mining through both Coal India and
auction of coal blocks to private companies, coal usage in India will increase as it
plateaus in other parts of the world, including China.
• The central government has opened up coal mining for the private
sector, claiming it as one of its most ambitious coal sector reforms. The government
anticipates that it will bring efficiency and competition in coal production, attract
investments and best-in-class technology, and help create more jobs in the coal sector.
• Plans for increasing power generation capacity and increasing
electricity demand in India, in line with rapidly growing industrial and infrastructural
development activities, are expected to drive the market.
India aims to become an economy of USD 5 trillion by 2024, with investing
heavily in infrastructure. It is expected to boost the energy demand for industry and for
electricity production. Although India has succeeded in bringing some form of electricity
access to almost all of its citizens, the countrys per capita power consumption is still
low, giving it a significant scope to grow.
Indian Coal Market
Coal is the most important and abundant fossil fuel in India. It accounts for 55% of
the countrys energy need. The countrys industrial heritage was built upon indigenous
coal.
Commercial primary energy consumption in India has grown by about 700% in the last four
decades. The current per capita commercial primary energy consumption in India is about
350 kgoe/year which is well below that of developed countries. Driven by the rising
population, expanding economy and a quest for improved quality of life, energy usage in
India is expected to rise. Considering the limited reserve potentiality of petroleum &
natural gas, eco-conservation restriction on hydel project and geo-political perception of
nuclear power, coal will continue to occupy centre-stage of India s energy scenario.
Indian coal offers a unique ecofriendly fuel source to domestic energy market for the
next century and beyond. Hard coal deposit spread over 27 major coalfields, are mainly
confined to eastern and south-central parts of the country. The lignite reserves stand at
a level around 36 billion tonnes, of which 90 % occur in the southern State of Tamil Nadu.
The Coal Ministry has announced that the government has fixed a target of 1.31 billion
tonnes (BT) of coal production for FY 2024-25, adding that the same will go up to 1.5 BT
by FY30. This comes as Indias domestic coal production has increased by over 16 per cent
in the current financial year as energy demand continues to rise. From April 2022 to
January 2023, India produced 698.25 MT of coal, against 601.97 MT during the same period
of the previous year. In April last year, Indias power demand touched a record high of
216 GW, up 6 per cent year-on-year, as several regions in the North faced severe
heatwaves.
The Ministry has been actively engaging with various state governments and Central
government agencies both for starting new coal mines and also for increasing coal
production in the currently operational mines. As a result of such initiatives, production
from captive and commercial coal mines has increased to 93.22 MT in April2022 to
Janaury2023 period of FY 22-23 from 71.31 MT in the same period of FY 21-22, showing a
growth of more than 30 per cent. In FY23 so far, Coal Indias production alone has
increased by over 15 per cent to 550.93 MT against 478.12 MT last year. The government
ramped up domestic production amid a sharp increase in power consumption last year in
India, which is the worlds third-largest energy-consuming country.
India is among the top five coal-producing countries in the world. However, some parts
of its coal requirement are met through imports as the country is also among the major
consumers of the dry fuel Indias import of coal rose 22% year-on-year in fiscal 2023,
after witnessing a consistent fall over the last three years. The imports have risen, even
as domestic coal production has gone up by 23% in the last five years. The increase in
imports in FY23 compares with imports of 208.9 million tonne in FY22; 215.25 million tonne
in FY21; and 248.54 million tonne in FY20. The data indicates that the imports are back to
pre-Covid levels of over 240 million tonne.
The increase is primarily led by steam or thermal coal imports that rose 28.5%
year-on-year to 161.74 million tonne, on higher demand from the power sector. The imports
are likely to be higher in FY24, and power consumption is also projected to grow in double
digits in the coming months, in view of unprecedented demand forecast by the Ministry of
Power. Peak power demand is projected to grow to 229 GW by June this year, which compares
with the peak of 215 GW a year ago.
(Million tonnes)
| Coking Coal |
51.83 |
51.20 |
57.16 |
56.05 |
4.59 |
|
| Non-Coking Coal |
196.70 |
164.05 |
151.77 |
181.62 |
14.62 |
|
| Total Coal Import |
248.53 |
215.25 |
208.93 |
237.67 |
19.21 |
|
| Coke |
2.88 |
2.46 |
2.48 |
3.63 |
0.24 |
|
*Import upto Apr, 2023 (Source:-DGCI&S)
Business Overview
Anmol India Limited is a leading provider of imported coal in India. Established. In
1988, the Companys history in the trading of coal spans over three decades. The Company
is a one-stop solution for all coal needs or services. Anmol India Ltd is also one of the
very few coal companies which uses new age technologies to optimize the supply chain.
Company intends to improve its supply chain even more and develop such a robust
technological supply chain stack so that when introducing new commodities we can have the
same competitive edge as Coal.
Anmol India Ltd has designed a new version of the tech platform "Anmol Coal"
which is one of its kind in the coal industry. The objective is to revolutionize the way
coal is sold on stock & sale basis. Anmol Coal mobile app helps users understand the
market better by not only publicizing the market prices but the terms & conditions
associated with a particular price point. This helps user get a better picture of the
market. The app takes bids from users and then allocates quantity based on best bids. This
mobile app is a major element of modern technology for retail sector and will give us a
competitive edge as it will make our services more accessible to the users. Through this
app we can engage higher level of retail customers.
Being a client centric organization, we strive hard to offer superior quality products
to our respected patrons. Backed with the team of dexterous and experienced professionals,
we never accept any sort of compromise with the quality of our products. To maintain the
quality standard of the product our professionals follow established norms and guidelines
of the industry.
Anmol India Limited is exploring new opportunities in the Chemical related products and
steel related products like Iron Ore, Iron Pellet, Met Coke etc. By exploring new
opportunities in the steel and chemical- related products markets and leveraging synergies
with our existing client base, we aim to broaden our business horizons and solidify our
position as a major player in the global trading arena. The Company is focusing on
investments in new products, to expand into new demographics and to identify & secure
strategic partnerships and collaborations within the chemical and steel-related products
sectors. This expansion is set to unlock significant growth potential for the Company, as
the demand for steel and chemical-related products continues to surge worldwide.
Strengths and Opportunities
• Quality tested products from reputed independent agencies (like
SGS, HRT etc).
• We believe that we are well positioned for the principal
competitive factors in our business. We offer end- to end service offering. We are adding
the benefit of coordination and collaboration with shipping and transport companies,
vendors and suppliers. It will improve our Companys system responsiveness to the actual
customers requirements which further reduces risks.
• Unique Mix of Customer: 70% Trader and 30% End User. Traders help
in advance booking, risk mitigation and quick inventory turnover. End user help in better
margin and inventory turnover in bearish market.
• Anmol India Ltd has introduced a new version of tech platform
"Anmol Coal" which is one of its kind in the coal industry as the app helps
users understand the market better by not only publicizing the market prices but the terms
& conditions associated with a particular price point.
• Strong Cash Flows that provide resources in the hand of the Company
to plan its expansion.
• Strong Distribution Network- over the years the Company has built a
reliable distribution network that can reach majority of its potential market.
• Companys system responsiveness to the actual customers
requirements which further helps in establishing long term relationships.
• As small scale manufacturing units is increasing, the market size
is ever increasing.
• As imported coal is washed and cheaper, more and more industries
are shifting to this fuel.
Internal Control Systems and their adequacy
Anmol India Ltd believes that internal control is one of the key pillars of governance.
It provides freedom to the management within a structure of appropriate checks and
balances. The Company has a proper and adequate system of internal financial controls,
commensurate with its size and business operation. It ensures timely and accurate
financial reporting in accordance with applicable accounting standards, safeguarding of
assets against unauthorized use or disposition and compliance with all applicable
regulatory laws and Company policies. Internal Auditors of the Company review the internal
financial control systems on a regular basis for its effectiveness, and necessary changes
and suggestions are duly incorporated into the system.
The Companys internal control environment warrants efficient conduct of operations,
security of assets, prevention and detection of frauds/ errors, accuracy and completeness
of accounting records, and the timely preparation of reliable financial information.
Financial Performance
During the FY 2022-23, Revenue from operations recorded a healthy growth of 33.12% from
Rs.1059.39 Crin FY22to Rs.1410.24 Cr in FY23. The EBITDA increased by 32.74% from Rs.27.52
Cr in FY22 to Rs.36.53 Cr in FY23. PAT stood at Rs. 18.66 Cr in FY23 as compared to
Rs.15.55 Cr in FY22 witnessing a growth of 20% . EPS increased by 19.90% from Rs. 13.67 in
FY22 compared to Rs. 16.39 in FY23.
We believe that our strong track record of financial performance and steady cash flows
from our operations provide us with sufficient resources, support our working capital
requirements service our existing debt on a timely basis and maintain a healthy level of
cash on our balance sheet.
Weaknesses and Threats
• Increased competition from cleaner fuel sources are chipping away
at coals dominant market share.
Cleaner alternatives are getting cheaper.
• We import our Coal from outside of India and payment of these
purchases is made in foreign currency. Changes in value of currencies with respect to
Rupee may cause fluctuations in our operating results expressed in rupees. Hence, we
mitigate the risk by hedging the dollars or by passing the dollar risk to traders as much
as possible.
• Policy uncertainty continues to be an issue
• Foreign Investment in mining sector
Human Resources
The Company considers its human capital to be the most important asset and treats its
people with respect and dignity in all situations. The team is a balanced mix of
experience and youth which allows a holistic approach to varied situations. Employee
knowledge enrichment is a core value of the organization, and focus has been placed on
training and development of the Companys human capital. Our endeavour is to provide a
work environment where continuous learning and development takes place to meet the
changing demands and priorities of the business. The Company offers employee-friendly
policies, industry benchmarked compensation, learning and career growth opportunities, and
empathetic health and safety initiatives so that employees feel motivated to perform at
their best.
Our people have always been one of our most valued stakeholders and key
differentiators.
Key Financial Ratios
| Particulars |
FY 23 |
FY 22 |
Remarks |
Debtors Turnover Ratio |
67.89 |
53.42 |
Higher Ratio Implies Companys collection of accounts is efficient and
that it has a high proportion of quality customers who pay their debts quickly. |
Inventory Turnover Ratio |
28.03 |
75.61 |
Receipt of Inventory in the last quarter of financial year decreases
the inventory turnover ratio. |
Interest Coverage Ratio |
3.32 |
4.27 |
Increase in interest rates, decreases the interest coverage ratio |
Current Ratio |
1.32 |
1.46 |
Generally, a current ratio below 1.00 could indicate that a company
might struggle to meet its short-term obligations, whereas ratios of above 1.00 might
indicate a company is able to pay its current debts as they come due. |
Debt Equity Ratio |
0.51 |
0.66 |
The higher debt equity ratio indicates increasing the debt & lower
capital base of company. |
Operating Profit Margin (%) |
2.59 |
2.60 |
The operating margin measures how much profit a company makes on the
revenue of the company after paying for variable costs of production, such as wages and
raw materials, but before paying interest, depreciation and taxes. |
Net Profit Margin (%) |
1.32% |
1.47% |
Due to increase in interest cost and other cost which are beyond the
control of the business, the net profit margin decreases. |
Return on Net Worth% |
23.59% |
25.78% |
Net Worth Ratio decreases due to increase in interest cost which is
beyond the control of business. |
Cautionary Statements
This Management Discussion & Analysis report makes forward looking statements based
on certain assumptions and expectations of future events over which Anmol India Limited
exercises no control. Anmol India Limited cannot guarantee their accuracy nor can it
warrant that the same will be realized. Actual results could differ materially from those
expressed or implies. There are various macroeconomic which could impact the operations of
Anmol India Limited.
|
By Order of Board of Director |
|
For Anmol India Limited |
| Sd/- |
Sd/- |
| Chakshu Goyal |
Vijay Kumar |
| Whole Time Director |
Managing Director & CFO |
| DIN: 03126756 |
DIN: 00574900 |
| Date: 13% July, 2023 |
|
| Place: Ludhiana |
|
+91-9892691696
