MANAGEMENT DISCUSSION & ANALYSIS
Global Economic Overview
In 2022-23, global economies grappled with several headwinds in the
wake of broadening inflationary pressures and geopolitical conflict in Europe. The
continuous hike in interest rates by Central Banks to combat inflation and the protracted
geopolitical crises in Europe did weigh on economic growth for several advanced and
developed economies.
Indian Economic Overview
Indias economy remained the fastest growing major economy in the
world while demonstrating strong resilience to the global headwinds during FY2023.
According to the Ministry of Statistics and Programme Implementation (MOSPI) it is
estimated to have grown by 7.2% for the year FY23. During this financial year 2023, India
has also marked itself as one of the largest economies in the world in terms of US
dollars.
A further deep-dive into a sectorial analysis reveals that economic
growth was driven by robust construction activity aided by increased infrastructure
investment both by the Central government and state governments. While post-COVID private
investment recovery is still at a nascent stage, there are early signals, which indicate
that India is poised for a stronger investment upcycle in both manufacturing and services
sectors. Although Indias GDP figures are robust, the actual consumption demand scenario
has been lagging.
This can be attributed to the fact that employment and actual household
savings are yet below pre- COVID levels, compounded by a high-interest environment leading
to higher EMI payouts. Thus, the actual disposable income for a large section of the
population remains lower than in earlier years. These figures are a better and more direct
barometer of the economic well-being of the population than GDP and as these pick up,
consumer demand is likely to see an uptick. We are beginning to see signs of that as there
are broad indications that the inflation trajectory has peaked. Indias headline retail
inflation rate crashed below the Reserve Bank of Indias (RBI) 6% upper-band in March
2023, which in turn should lead to interest rates stabilising and thus consumer demand
should return. The outlook for the Indian economy remains encouraging bolstered by an
underlying and overall macroeconomic stability across the globe, while remaining resilient
to geopolitical and geo-economic.2
1. World Economic Outlook, April 2023: A Rocky Recovery (imf.org)
World Economic Outlook, April 2023: A Rocky Recovery (imf.org) 2.
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www2.deloitte.com/content/dam/Deloitte/in/Docum
ents/finance/in-finance-business-responsibility-and-sustainability-report-noexp.pdf
Overview of Lighting Industry
India is the second most populous country in the world and yet, is only
the fifth largest electricity consumer a situation that has led to a never-widening
demand-supply gap. The consumer lighting industry is growing rapidly due to increasing
access to electricity across the country. lighting is gaining popularity and it
constitutes a significant proportion of the consumer lighting industry in India. Looking
ahead, the industry is projected to show good growth over the next few years. However,
given the dynamic nature of this industry, competitive pressures are likely to weigh
heavily on industry players and it may lead to rapid price erosions in some segments.
Company Overview
The Company was incorporated on 26th of October, 2009 as "Artemis
Electricals Private Limited" under the provision of Companies Act, 1956 with
registrar of Companies bearing Reg no 196683. We subsequently changed the name of our
Company from "Artemis Electricals Private Limited" to "Artemis Electricals
Limited" pursuant to shareholders resolutions passed at the Extra Ordinary General
Meeting held on 25th July, 2015.
Further, subsequently Company changed his name from Artemis Electricals
Limited to Artemis Electricals and Projects Limited at the Extra Ordinary General Meeting
held on 25th June, 2022 by way of passing Postal Ballot under Section 110 of
the Companies Act, 2013.
The company is promoted by Mr. Pravin Kumar Agarwal and Yashvikram
Infrastructure Private Limited. Our Promoter Mr. Pravin Agarwal has experience of working
within the company since more than a decade. Prior to starting the business of Electrical
and project business Mr. Pravin Kumar Agarwal was engaged in manufacturing of other
engineering products, and related Industries.
Risks and Risks Mitigation Strategy of Artemis
Competition Risk:
Due to the growth prospects and government support in the industry, the
company is exposed to intensive competition. More and more players are entering the market
due to low entry barrier.
Mitigation Strategy:
Company will consistently focus on innovation and development of
products having cutting-edge technology and will manufacture such products through its
robust, automated and state of art facility for quality output. This will help to control
costs thereby making the product pricing competitive and will have the first mover
advantage against the competition.
Product Risk:
Risk on losing out to competition is very high if company is not
indulged in regular R&D.
Mitigation:
Artemis has an excellent R&D team in place. They have already
proved their worth in the past and will continue to do so. The management is well aware of
such risks and therefore continues to always support and encourage the R&D team. The
company has also shortlisted a few niche lightings markets which can be tapped in near
future due to successful results of the R&D team.
Operational Risk:
The company has to ensure high operational efficiencies and at the same
time has to limit its operational costs. A sudden increase in cost of material will
directly impact the margins. The company also has the risk of compromising on the quality
to limit the costs.
Mitigation:
The company has an excellent manufacturing infrastructure with the most
optimized manufacturing costs in the industry. The company also has a vigil internal
department to continuously monitor price movement of all raw materials and have developed
mechanisms such as optimal inventory control, quarterly price reviews, long term tie ups
with vendors, etc. to ensure that any sudden cost rise of raw materials can be effectively
cushioned by not letting it effect the company in short & medium term. The company has
a philosophy of never to compromise in quality.
Regulatory Risk:
Changes in government regulations or their implementation could disrupt
tour operations and adversely affect our business and results of operations. If we fail to
comply with all applicable regulations or if the regulations governing our business or
their implementation change adversely, we may incur increased costs or be subject to
penalties.
Mitigation:
Company keeps a keen eye on significant developments in Indias
economic policies and industry related regulatory changes. The companys view is that
no government will in the foreseeable future bring in or create regulatory hurdles for LED
lighting solution companies or similar companies due to their nature of providing green
energy solutions. Anyhow the company follows sound and prompt regulatory compliances to
ensure seamless operations.
Geographical Risk:
Region specific unfavourable events and country specific unfavorable
events may affect the companys ability to sell products in the affected regions for
prolonged period.
Mitigation:
The companys revenue distribution is well diversified all over
the regions in India. Also, majority of our business is driven through supplies to OEM
partners viz. Bajaj. The company has also ventured out to market its own brand for which
the strategy is to promote Products through stockiest, distributors & retailers
chains. This has been successfully piloted in 5 states across 62 distributors. Further
then this the company is also actively pursuing to enter export markets which will further
mitigate our dependency on a single country for business.
Financial and Operational Performance
Key Financials Ratio Analysis Comparison
| Rati o Anal ysis |
Units |
FY 2022- 23 |
FY 2021-22 |
%increase and decrease |
| 1 |
Current Ratio (Total current
assets/Total current liabilities) |
0.81% |
2.3% |
-64.84% |
| 2 |
Debt-Equity Ratio (Total
Debt/Total Equity) |
0.37% |
0.43% |
-15.53% |
| 3 |
Debt Service Coverage Ratio
(Profit Before Interest & Tax/Debt Service) |
0.38% |
-5.78% |
-106.52% |
| 4 |
Inventory Turnover Ratio
(Sale of Products/Average Inventory) |
0% |
0.00% |
104.58% |
| 5 |
Trade Receivables Turnover
Ratio (Revenue from Operation/Average Trade Receivable) |
1.35% |
0.66% |
39.84% |
| 6 |
Trade Payables Turnover Ratio
(Net Credit Purchases (Raw Material and Work contract Expenses) / Average Trade Payable) |
1.82% |
1.3% |
-821.58% |
| 7 |
Net Capital Turnover Ratio
(Revenue from Operations/Working Capital (Total Current Assets less Total Current
Liabilities)) |
-6.36% |
0.88% |
-150.85% |
| 8 |
Return on Equity (Profit for
the Year/Total Equity) |
8.55% |
-16.82% |
-132.79% |
| 9 |
Net Profit Ratio (Profit for
the Year/Revenue from Operations) |
11.19% |
-34.11% |
-200.48% |
| 10 |
Return on Capital Employed
(Profit before Tax and Finance Costs/Capital Employed (Net worth + Lease liability +
Deferred tax Liability)) |
9.07% |
-9.03% |
|
Cash Flow Statement:
| Particulars |
2022-23 |
2021-22 |
|
(In Lakhs) |
(In Lakhs) |
| Net Cash Used in Operating Activities (A) |
1,166.61 |
162.75 |
| Net Cash Used in Investing Activities (B) |
-766.24 |
-1,735.92 |
| Net Cash Generated from Financing Activities (C) |
-400.42 |
1,573.28 |
| Cash & Cash Equivalents (D=A+B+C) |
(0.05) |
0.11 |
| Cash and Cash Equivalents at the beginning (E) |
2.35 |
2.24 |
| Cash and Cash Equivalents at the end (F=D+E) |
2.3 |
2.35 |
Future Outlook
We believe that with our top quality of products and consistent quality
assurance, we always get appreciation and praise by our clients and customers due to which
we have always seen excellent growth in demand.
1. Export Business Plan: Expand the product line and extensive research
in the Lithium-Ion Battery segment
2. Capex plans for this financial year under Phase I of setting up of a
state-of-the-art manufacturing facility to manufacture Lithium-Ion batteries and other
allied products.
Cautionary Statement
Statements in this report describing the Companys objectives,
expectations or predictions may be forward looking within the meaning of applicable laws
and regulations. The actual results may differ materially from those expressed in this
statement because of many factors like economic condition, availability of labor, price
conditions, domestic and international market, changes in Government policies, tax regime,
etc. The Company assumes no responsibility to publicly amend, modify or revise any
statement on basis of any development, information and event.
+91-9892691696
