OVERVIEW:
This report is an integral part of the Boards Report and covers
management perspective on economic environment, industrial scenario, business performance,
opportunities, threats, risks & concern, internal control etc. during the Financial
Year 2022-2023. This should be read in conjunction with the Companys Financial
Statements, the schedules and notes thereto and other information included elsewhere in
the Annual Report.
ECONOMIC ENVIRONMENT:
Nearly all the major economies in the world have tried to bottle the
stubborn inflation genie by maintaining high interest rates, growth rates have been
relatively stable despite the rising rates.
It all started with the pandemic-induced contraction of the global
output, followed by the Russian-Ukraine conflict leading to a worldwide surge in
inflation. Then, the central banks across economies led by the Federal Reserve responded
with synchronised policy rate hikes to curb inflation. The rate hike by the US Fed drove
capital into the US markets causing the US Dollar to appreciate against most currencies.
This led to the widening of the Current Account Deficits (CAD) and increased inflationary
pressures in net importing economies.
The rate hike and persistent inflation also led to a lowering of the
global growth for 2022 and forecasts for 2023 by the IMF. The frailties of the Chinese
economy further contributed to weakening the growth forecasts. Slowing global growth apart
from monetary tightening may also lead to a financial contagion emanating from the
advanced economies where the debt of the non-financial sector has risen the most since the
global financial crisis. With inflation persisting in the advanced economies and the
central banks hinting at further rate hikes, downside risks to the global economic outlook
appear elevated.
The IMF expects global growth to moderate from 3.2 percent in 2022 to
2.7 percent in 2023.
The Indian economy did reasonably well to grow at 7 per cent (as per
the Economic Survey) in FY 2022-23, relatively muted against the previous years
growth of 8.7 percent which was largely attributable to a post Covid bump.
INDUSTRY SCENARIO:
The earlier-than-expected end of Covid restrictions in China led to a
rapid rebound in consumption-driven economic expansion. Since more than 50% of major
mining commodities are consumed in China, the returning demand had a positive impact on
volumes. Globally the mining sector grew by 6.1% in 2022.
Miners have maintained robust investment discipline since the 2015-2016
commodity downturn, postponing investment projects when returns were uncertain. Supply and
demand in major mining commodities remain balanced with no concerns about fundamental
oversupply, leading to broadly unchanged short-term prices.
Copper and Aluminium prices are responsive to economic growth and
sentiment and so they both held up during 2022.
Nickel & Lithium discoveries world over have been receiving their
fair share of attention, how many of those actually translate into commercially viable
& sustainable sources needs to be seen.
OPPORTUNITIES:
The increasing use of Aluminium in global decarbonizing efforts, right
from Electric Vehicles, solar panels bode well for the Companys Bauxite operations.
Ukraine has been a large global exporter of white performance minerals,
the continuing conflict in the region has seen India emerge as an alternate strategic
supplier of quality Kaolin products.
THREATS:
The global interest rate cycle may continue to hamper demand across
economies, this in turn may lead to a sluggish demand for the Companys value-added
products. Furthermore, China the worlds second largest economy continues to remain
under a cloud, global mineral & commodity volumes & prices are very sensitive to
Chinese demand.
The continuing conflict in Ukraine may lead to higher oil prices which
could in turn have implications on inflation and on costs.
FINANCIAL PERFORMANCE:
The Financial Statements for the year ended 31st March,
2023, have been prepared in accordance with the Companies (Indian Accounting Standards)
Rule, 2015 (Ind AS) prescribed under section 133 of the Companies Act, 2013 and other
recognized accounting practices and policies to the extent applicable.
For the financial year ended 31st March, 2023, revenue at a
standalone level stood at Rs. 26,271 lakhs with a pre-tax loss of Rs. 701 lakhs.
At the Consolidated level, the total revenue increased by 40% and stood
at Rs. 1,91,617 lakhs as against Rs. 1,37,344 lakhs for the previous financial year ended
31st March, 2022 with a profit of Rs. 10,973 Lakhs before exceptional items and
tax, an increase of 3.5% over the previous financial year.
OUTLOOK:
The outlook for FY 2023-24 is set to be positive on account of two more
Bauxite mines becoming operational in Guinea from the second half of the financial year,
which would enable the company to export higher volumes.
The Company shall continue its constant endeavour to move up the value
chain by introducing a new line of animal feed products which are value-added from quality
Bentonite. Furthermore, the Companys Kaolin products are consolidating its position
in the overseas market making up for the supply that has been lost because of the turmoil
in Ukraine.
RISK & CONCERNS:
The mining industry remains fraught with several challenges such as
commodity cycles, environmental risks, regulatory & compliance risks; the Company has
a well-oiled risk management apparatus.
Any turbulence in large commodity hungry Asian economies such as India
and China could significantly affect demand for the companys products.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:
In keeping with the size and nature of its business and complexity of
its operations, commensurate internal control procedures are implemented by the Company.
The guidelines are set by the Audit Committee Members and Board of Directors who are
responsible for the internal control system. They carry out periodic reviews of the
internal audit plan, verify the adequacy of the control system, marks its audit
observations, and monitors the sustainability of the remedial measures.
On the recommendation of the Audit Committee, the Company appointed M/s
Atul HMV & Associates LLP as the Internal Auditors of the Company for the financial
year 2022-2023. Observations made in internal audit reports on business processes,
systems, procedures and internal controls and implementation status of recommended
remedial measures by the Internal Auditors, are presented quarterly to the Audit
Committee.
The Companys internal control system is designed to ensure
management efficiency, measurability and verifiability, reliability of accounting and
management information, compliance with all applicable laws and regulations, and the
protection of the Companys assets. This is to timely identify and manage the
Companys operational, compliance-related, economic and financial risks.
RESEARCH & DEVELOPMENT:
Companys Research and Development (R&D) capabilities are
playing an important role towards furthering your companys vision and goals. Its
Knowledge & Innovation Center at Bhuj, Gujarat, has come up with several marketable
world-class value-added products. During the year, the R&D Centre has done extensive
work on advanced refractory materials and on certain B2C value-added products.
The brief details of the R & D activities during the year are given
under ‘Annexure - C forming part of the Directors Report.
HUMAN RESOURCES DEVELOPMENT:
Human Resource is Companys greatest asset and your Company
believe that in the roadmap for building the future, employee involvement is crucial to be
continually creative and drive organizational excellence. The organizational excellence
depends on the quality of people employed. Therefore, your Company focus on the culture of
recognition, innovation in technology, engagement of right people for the right job and
process improvements. Your companys ethics, principles and ideals have fostered a
positive work culture among the employees across all its plants and offices.
The employees are treated with respect and dignity at all times and
senior management is easily accessible for counseling and redressal of grievances. Your
Company had a dedicated human asset of over 439 employees spread across locations in the
organization as on 31st March, 2023.
KEY FINANCIAL RATIOS:
The Key Financial Ratios for FY 2022-2023 and FY 2021-2022, along with
explanation for significant changes (change of 25% or more) are as follows:
Particulars |
2022-2023 |
2021-2022 |
% change |
|
|
|
|
1 Debtors turnover Ratio (Days)* |
223 |
112 |
99% |
Sale/Average Debtors |
|
|
|
2 Inventory turnover Ratio (Days)* |
204 |
74 |
176% |
Sales /Average Inventory |
|
|
|
3 Interest coverage ratio ** |
0.74 |
0.48 |
54% |
(EBIT: Profit before
Exceptional Item and tax + interest on borrowing) / Interest Expenses |
|
|
|
4 Current ratio |
1.60 |
1.18 |
36% |
Current assets /Current Liability |
|
|
|
5 Operating Profit Margin
** (EBIT-other Income) /Net revenue from Operation |
-11% |
-2% |
450% |
6 Net Profit Margin** |
-3.15% |
-2.62% |
20% |
(Net Profit /Revenue from Operation) |
|
|
|
7 Return on Net worth ** |
-28% |
-35% |
20% |
(Net Profit /Average net worth ) |
|
|
|
8 Debts Equity Ratio |
2.35 |
1.87 |
26% |
Total debts /Shareholders fund |
|
|
|
Notes:
Exceptional items are excluded from Net profit.
* Due to reduction in sales by 63% during the financial year
22-23 compared to previous year.
** Due to significant reduction in purchase of trading goods and
selling & distribution overheads Profit has increased during the FY 22-23 compared to
FY 21-22 by 55%.
*** Due to decreased in current liabilities *** Due to decreased in
shareholder fund
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis describing the
Companys objectives, projections, estimates, expectations may be
"forward-looking statements" within the meaning of applicable securities laws
and regulations. Actual results could differ materially from those expressed or implied.
Important factors that could make a difference to the Companys operations include,
among others, downtrend in the industry, economic conditions affecting demand/supply and
price conditions in the domestic market in which the Company operates, changes in
political and economic environment in India, changes in the Government regulations, tax
laws and other statutes, litigations and incidental factors.
|
For and on Behalf of the
Board of Directors |
|
Sd/- |
Sd/- |
|
CHETAN SHAH |
HEMUL SHAH |
|
EXECUTIVE CHAIRMAN |
EXECUTIVE DIRECTOR & CEO |
|
(DIN: 00018960) |
(DIN: 00058558) |
Place: Mumbai |
|
|
Date: 10th August, 2023 |
|
|
E & OE regretted |
|
|
+91-9892691696
