This document contains certain forward-looking statements based on the currently held beliefs and assumptions of the Management of the Company, which are expressed in good faith, and in its opinion and judgment, are reasonable. For this purpose, forward looking statements mean statements, remarks, or forecasts that address activities, events, conditions, or developments that the Company expects or anticipates which may occur in the future. Because of the inherent risks and uncertainties in the social and economic scenarios, the actual events, results, or performances may differ materially and substantially from those indicated by these statements. Artson Engineering Limited disclaims any obligation to update these forward-looking statements to reflect future events or developments.
FY 23 outlook - a new beginning
According to a latest UN report released, Indias projected economic growth for 2022 has been downgraded by more than 2% due to ongoing conflict between Russia and Ukraine. India will be constrained on multiple fronts, including energy access and steep rise in steel prices, primary commodity constraints, trade sanctions repercussions, tighter policies, and financial instability. According to analysts, major economic slowdowns & recessions are expected in regions of Western Europe and Central Asia, including Russia.
The war has increased the upward pressure on worldwide energy and primary commodity prices, and increasing production costs, while trade disruptions and sanctions are expected to chill long-term investment.
UNCTAD (United Nations Conference on Trade and Development) is concerned that a combination of weakening global demand, insufficient international policy coordination, and high debt levels because of the pandemic will cause financial shockwaves, pushing some developing countries.
However, GOI has taken some corrective measures. Following deteriorating pandemic-related developments, the Reserve Bank of India announced further measures to support liquidity provision to micro, small, and medium enterprises and loosened regulatory requirements on the provisioning for non-performing loans for banks and NBFCs.
Economic activity in FY22 will benefit from policy support, including higher spending on infrastructure, rural development, health, and a stronger-than-expected recovery in services and manufacturing. According to the Q4 2022 Global Construction Survey the construction industry in India is expected to grow steadily over the next four quarters. The growth momentum is expected to continue over the forecast period, recording a CAGR of 7% during 2024-2025. The construction output in the country is expected to reach INR 653,701 million by 2025.
The governments thrust on infrastructure, coupled with an increase in demand from construction, engineering, and other sectors, is expected to push up domestic steel consumption in 2023. The countrys consumption is expected to be 111 million tonnes (mt) in calendar year 2022 (CY22) after an improved consumption of 104 million tonnes in CY 21. Apart from the production and consumption equation of steel, supply chain performance and logistical arrangements are expected to play a crucial role in 2022 amid the pandemic and the conflict in Ukraine. Steel is a major raw material in operations of the Company and the dynamics of steel market will always have an impact.
Although, Industrial Infrastructure sect or is likely to recover post registering two consecutive years of revenue decline, Ukraine war will prove to be a dampener. The sectors execution profile was hindered in FY21 & 22, majorly on account of the elections coupled with government changes in few states resulting in changes in the priorities. This, coupled with unseasonal rainfall and impact of pandemic, led to sector revenue falling 7.1% y-o-y during the year.
However, the Companies in the contracting segment have been able to address the supply issues such as manpower mobilization and logistics for raw material procurement quickly, resulting in faster recovery and execution. This is expected to continue in FY23, based on the union budgets proposal of higher allocations for infrastructure than in the past few years and that sector revenue is expected to grow by 12%- 15% YoY in FY23. However, recent spike in the steel, cement prices with have considerable impact on infrastructural cost.
The Oil Storage Tank market is anticipated to showcase moderate growth during 2022-2024, owing to increased demand for crude oil and gas and growing expenditure in onshore and offshore oil operations across India.
The Companys unit at Nashik is involved in manufacturing of complex process equipment such as cryogenic vessels, columns and large and high-pressure heat exchangers and other pressure vessels for process plants Space, Hydrocarbon and Oil and Gas industry. Precision fabrication in different materials such as Carbon Steel, Stainless Steel, Titanium and other specially cladded plates is handled from this manufacturing facility.
Heavy structural fabrication is undertaken at the work center located at Nagpur, which caters to fabricated structure requirements for the metallurgical, power, and nuclear sectors.
Several new prospects in manufacturing process vessels, heat exchangers, columns and industrial structures are visible in the near future. Your Company, being one of the key players in these sectors, expects to be largely benefitted from these opportunities. The Company is also embarking on a drive to upgrade its manufacturing facilities at Nashik and Nagpur, to retain its competitive advantage and increase market share.
The major identified risk areas for Artson are input cost pressure, rising wages, contract execution delays due to pandemic stretched cash flows. The Company also seeks to protect its stakeholders interests through a robust Project Risk Management (PRM) framework enabling it to match risk profiles with the expected returns before making any financial commitment.
The contracts cell of the Company oversees the risks that may have adverse effect on the project cost and time schedule. The Operations and the Business Development teams of the Company, take necessary steps to mitigate the risks by prudently bidding for tenders, considering, the various risks which are likely to be involved in project execution and making the business terms clear with the client before taking up the project. The Project Review Committee of Board periodically monitors, evaluates, and reviews strategy to eliminate and minimize risks in coordination with the respective departments.
Environmental Protection and Sustainability
As the Company operates in an increasingly resource-constrained world, being environmentally conscious and efficient are keys to its operations. The Company has a Corporate Environment, Health, Safety and Quality (EHSQ) Policy to articulate, guide, and adopt an integrated approach towards implementing EHSQ objectives and the Company remains committed towards the said policy. These established systems certified by reputed certifying agencies have helped to monitor and manage our operations systematically, safely and in an environment- friendly manner. The Company continues to abide by regulations concerning the environment by allocating adequate investment and resources on a continuous basis to adopt and implement pollution control measures. Our continuous endeavour to go beyond compliance and conserve natural resources helps to march towards attaining excellence in environmental management and efficient and sustainable operations as well.
Ever since Covid pandemic has erupted, the entire world has moved towards virtual office. Artson is no exception. Employees are used to virtual office through "Work from Home" system. It has reduced Company overhead without affecting productivity. Paperwork has reduced significantly, leading towards greener world.
The Company has received a certificate of appreciation from IOCL, for its project at Dhumad, Gujarat for the significant achievement of 1.87 million safe man hours & in recognition & appreciation of continual improvement and excellent performance in Occupational Health, Safety & Environment during the project.
Discussion and Analysis of Financial Condition and Operational Performance
The financial position as on March 31,2022, and performance of the Company during the FY ended on that date is tabulated hereunder:
Overview of our results of operations:
Amount (Rs in Lakhs)
|Gross Turnover (including Other Income)||17,351.39||15,232.17|
|Profit before Interest and Depreciation (EBIDTA)||757.22||613.15|
|Depreciation and Amortization||117.37||106.16|
|Net Profit/(Loss) Before Tax (PBT)||-437.06||-511.18|
|Less: Tax expense||-65.83||-56.70|
|Net Profit/(Loss) After Tax (PAT)||-502.89||-567.88|
|Other Comprehensive Income||1.60||7.07|
|Total Comprehensive income||-501.29||-560.81|
|Balance of Profit brought forward||-414.10||146.71|
|Balance available for appropriation (after adjusting other equity)||-319.66||-414.10|
|Surplus/(deficit) carried to Balance Sheet||-319.66||-414.10|
|EBITDA as % of total Income||4.36%||4.03%|
|PAT as % of total Income||-2.90%||-3.73%|
In FY 2022, Company registered a total revenue from operation of 17,264 lakhs (FY 2021: 15,028 lakhs), a 14.8% increase over previous year. The increase in total revenue was largely due to improved operations in current year. However, the loss incurred was mainly due to extended stay in certain high value projects and cost increase in certain fixed price contracts.
Internal Control System and Their Adequacy
The Companys internal control system is commensurate with the nature of its business and the size and complexity of its operations, which provide among other things, reasonable assurance of authorization, recording and reporting of the transactions of its operations in all material aspects. The internal control system is managed through continuous internal audit by outside professionals, duly supported by respective teams. The audit is carried out through an internal audit plan, which is reviewed in consultation with the Audit Committee, which reviews the adequacy of internal control checks in the system across all significant areas of the Companys operations. The Audit Committee also meets the Companys Statutory Auditors to ascertain their views on the financial statements, financial reporting system, internal control system and compliance to accounting policies and procedures. Significant observations made in the internal audit reports on internal control process improvements and the status on implementation of recommended measures are presented to and reviewed by the Audit Committee and the Board of Directors. The Company also has a documented comprehensive internal control manual for all the major processes, viz, payroll, contract labour, human resources, procurement and purchase of material, fixed asset, inventory control, cash Management and foreign exchange transactions, etc., which have been designed to provide reasonable assurance with regard to recording and providing reliable financial information, complying with the applicable statutes, safeguarding of assets from unauthorized use or losses, authorization of transactions and adherence to corporate policies.
Human Resources & Industrial Relations
The human resources (HR) strategy at Artson is focused on introducing a performance-driven atmosphere in the Company, where innovation is encouraged, performance is rewarded, and employees are motivated to realize the Companys goals. The Companys HR department co-creates all HR strategies along with the Senior Management and the Board to influence change, attract talent and build capabilities. The HR department responds to varied human resources needs of the Companys business to enable the human strategic advantage.
Talent Development and employee engagement
Key components of talent development at the Company are initiating various skill and leadership development program as well as creating a culture of continued employee engagement. During the year, the Company organized 63 training programs with attendance of 153 participants, covering 139 Training Man-days. Safety, Personality & Leadership development, and Statutory compliances and procedures were some of the key topics covered during these programs.
Artson aims to create healthy talent and gender diversity. The Companys human capital comprises of 184 employees (including 10 women) across its manufacturing units and at various construction sites. 42.39% of the Companys human resources is below 35 years. Artson is able to maintain an average employee tenure of 4.4 years with overall average experience of 13.4 years and the annual attrition rate has been 33% in FY22. About 70.6% of the Companys work force comprises of technically qualified as well as engineers such as BE, B Tech, MBA, DCE, DME & ITI.
|Registered Office||By Order of the Board|
|2nd Floor, One Boulevard, Lake Boulevard Road, Hiranandani Business Park, Powai, Mumbai- 400076, Maharashtra Phone No: +91 40 6601 8194; Email: firstname.lastname@example.org CIN: L27290MH1978PLC020644; Website: www.artson.net||For Artson Engineering Limited Vinayak K. Deshpande|
|Date: 25th April 2022||Chairman|
|Place: Mumbai||DIN: 00036827|