arcee industries ltd Management discussions

Overview

The objective of this report is to convey the Managements perspective on the external environment and steel & PVC industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during FY2022-23. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Integrated Report and Annual Accounts 2022-23. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (SEBI) from time to time.

Your Company is engaged in the manufacture of Rigid PVC Pipes and Fittings. The government is backing the industry through favorable agricultural reforms. Demand is also expected to boost by Infrastructure & Construction development sustained by industrial, manufacturing and be stimulated by agriculture sectors.

As on December 15th, 2020, your company has taken on lease the Land, Building and Machinery of Arcee Ispat Udyog Private Limited, a unit for manufacturing of Black Steel tubes & pipes, for a period of 10 years. Company has started its Commercial production of Black Steel tubes & pipes on January 14th, 2021. After this, Company is working in two segment:- 1. PVC pipe 2. Steel pipe. But due to continuous loss in the steel pipe manufacturing, On 22^nd May, 2023, Company has cancelled the Lease of Land, Building and Machinery with Arcee Ispat Udyog Private Limited. After this, Company is working only in One segment i.e. PVC pipe

Global Economy

The global economy experienced a slowdown in 2022-23 due to high inflation rate, tightening financial conditions, increasing interest rates, rising geopolitical tensions, ongoing Russia and Ukraine war and some ongoing effects of Covid-19, as a result of these the global economy could only grow by 3.2% in 2022. With most of these challenges continuing in 2023, the global economy is projected by IMF to grow at 2.8% in 2023 which will be one of weakest growth rates since 2001. Concern over slowdowns in major economies remain, with recent troubles in banking sector aggravating worries that runaway inflation and tight monetary policy would hamper growth and financial investments. As per IMF close to 90% advanced economies will experience slowing growth this year

Indian Economy

The Indian economy demonstrated resilience despite challenges in the global environment on the back of strong demand, support from Government policies and strong banking system. As per World Bank report of April 2023, India was one of the fastest growing economies in the world in 2022-23 at 7% growth. Outlook for lndian economy remains positive for 2023-24 with projected growth at 6.3%. IMFs bi-annual World Economic Outlook projects lndias retail inflation to ease in 2023-24 to 4.9% from 6.7% in FY 2022-23 which will help improve demand and the discretionary expenditure.

lndias direct and indirect tax collections were robust in 2022-23. Direct tax collections increased by 17.63% and indirect tax collections increased by 22% over the previous year. Merchandise and service exports estimated at US$ 765 billion jumped by 16% during the year 2022-23.

IMDs prediction of normal rains during the current year at 96% of long period average will be good for agricultural sector and rural economy of lndia. lncreased focus on infrastructure development by the Government of lndia and affordable data pricing has helped the rural and semi urban areas not only in terms of improved employment opportunities and income source but has also brought them closer to urban centres and thereby increasing aspirations for better life style. Rural consumption of FMCG products grew by 8.9% during 2022-23 which indicates increased preference towards quality products.

Changes in the weather pattern with increased unseasonal spells of heavy rains and larger periods of heatwaves during the summer months may however, have a negative impact on some sectors of the economy. With signs of resurgence of Covid-19 pandemic virus, the same needs to be closely monitored with increased preventive steps to control the spread so as not to adversely affect the economic growth in 2023-24.

PRODUCT SEGMENT WISE SHARE IN TURNOVER FOR THE LAST TWO YEARS

The Revenue from operations of the Company constitutes of:-

The Turnover of the PVC Pipe segment is Rs. 308.61 Lacs as against Rs. 626.73 Lacs during the previous year.

The Turnover of the Steel Pipe segment is Rs. 1827.51 Lacs as against Rs. 2798.13 during the previous year.

RISK MANAGEMENT

Company continuously monitors the risks associated with its business and operations including timely identification of new risks, if any, and plans to mitigate risks so as to avoid any adverse impact on the Companys operations.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Human Resources are one of the most important ingredients to fuel future growth and progress of the organization. The Company therefore strives to align human resource policy and initiatives to meet business plans. Companys focus on promoting well being of its employees, providing safe and congenial work environment continues. Training of employees to maintain high level of motivation is an ongoing process.

Career development opportunities are provided at all levels and across all functions. lndustrial relations at all the units remained cordial during the year.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The internal control systems for safeguarding and protecting assets of the Company against loss from unauthorized use or disposition are in place. Regular internal audits, review by management and documented policies, guidelines and procedures supplement the internal controls which are designed to ensure that financial and other records are reliable for preparing financial information and other data and for maintaining accountability of assets.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The Company has produced 339 MT of PVC Pipe and 2738 MT of Steel Pipes as compared to 710 MT of PVC Pipe and 5004 MT of Steel Pipes in the previous financial year while the Company has sold 355 MT of PVC Pipe and 2991 MT of Steel Pipe as compared to 779 MT of PVC Pipe and 4744 MT of Steel Pipe in the previous financial year. The company has achieved turnover of Rs. 2135 Lacs as compared to previous year

turnover of Rs. 3424 Lacs. During the year the company has Loss after tax of Rs. 121 Lacs as compare to last year profit after tax of Rs. 46 Lacs. The reserve and surplus stood to Rs. (76.29) Lacs. The earnings per share is Rs. (2.36)/-.

INDUSTRIAL RELATIONS AND RESOURCE MANAGEMENT:

The Company during the previous year continued its record of good industrial relations with its employees. During the year various initiatives had been taken to improve the performance and productivity levels in various departments of the Company. The Company conducts training sessions on various topics ranging from safety, productivity, handling of hazardous products etc. that help to train employees to overcome operational constraints. The Company has its in house technical centre in the plant to train the new recruits before their placement that helps in optimum utilization of resources as well as maintaining quality standards. It also indulges into and implements various HR initiatives and activities including employee welfare, special rewards, performance review system and various employee motivation activities.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing Companys objectives, estimates, expectations, or projections may constitute "forward looking statements", within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied in the statements. Important factors that could make a difference to Companys operations include economic conditions affecting demand/ supply and price conditions in the domestic and international markets, changes in the Government regulations, tax laws / other statutes and other incidental factors.

REGISTERED OFFICE :
7th K.M. Barwala Road,		FOR AND ON BEHALF OF THE BOARD
Talwandi Rana, Hisar 125 001
	Shruti Gupta	Akshat Gupta
Date : 14th August, 2023	(Whole Time Director)	(Director)
	DIN 01742368	DIN 00284927
CIN : L29120HR1992PLC031681
Phone : 98120-20111, 98120-40111
Email : arceeind@rediffmail.com
Website: www.arceeindustries.in