AVSL Industries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

GLOBAL AND INDIAN ECONOMIC OVERVIEW:

India remained resilient & the fastest growing major economy in the world in 2023-24. Its real GDP growth is pegged at a high rate of 8.2 per cent. The growth is bolstered by steady domestic demand, an uptick in the manufacturing and service sectors and the government and private sector focus on infrastructure spending.

Going forward, Indias economic outlook remains cautiously optimistic with RBI estimating it to be a good percent for 2024-25. Experts believe this growth will be based on sustained government capex push, healthy corporate performance, softness in global commodity prices, the prospect of new private capex and rising domestic demand.

China +1 (Read India) has been the buzzword among multinationals. The large population, favorable demographics, healthy foreign exchange reserves, large government spending on infrastructure, controlled inflation, strong GST collection and stable political scenario is a perfect recipe for robust economic growth for decades.

OVERVIEW AND OUTLOOK OF COMPANYS BUSINESS

AVSL Industries Limited are manufacturing organization and situated at:

1. Plot No. E-675, Ph. I to IV, Ghatal, Samtal, Bhiwadi, District Alwar, Rajasthan-301019

2. Plot no. 717, Halol-2 and Halol- Maswad Industrial Estate, Gujarat-389350

3. Plot no. 2006, Halol GIDC Estate, District Panchmahal, Gujarat-389350

4. Plot No G-152 TO G-162, Karoli Industrial Area, Tehsil Tijara, Bhiwadi, Alwar, Rajasthan-301019 Since beginning, we were mainly manufacturing:

Power Cable and Telecom Industry and some material for irrigation industry.

Our product includes PVC Compound, HDPE/LDPE Compound, PVC Filler, HDPE/LDPE Tape, PVC tape, Polyester Tape and similar product, Aluminum Mylar tape, Marking tapes (used in cable wires as well as irrigation pipes) these products are mainly manufactured at Bhiwadi and Karoli (Rajasthan units). PVC compound and PVC filler and some other products are manufacture at Maswad and Halol (Gujarat units).

There is tremendous scope and demand of the power cables and house wirings due to increased focus by Government of India due to electrification and increased demand in housing.

The raw material demand from the user industry is again expected to be huge, so we are continuously trying to improve the capacity utilizations.

The new segment of PVC/ WPC board and door frames which is a retail product and used by direct consumers with shorter credit cycle and direct touch with customers is challenging but with bright future prospect to convert the company from commodity driven to mixture of consumer driven.

We have got very good response from the industry due to increase focus by government of India to housing for all. There is a huge demand due to multiple uses by household as well as corporate sectors and product can be sold anywhere in India. We are right now selling through wholesalers at present spreading all over India.

These products are expected to generate improved revenues in the coming years because of increasing in production capacity, due to stabilization of production and increase in installed capacity.

MARKET OVERVIEW

PVC/WPC Foam Sheet, Boards & Door Frames (Chaukhat)

PVC/WPC Foam Sheets, Boards & Door Frames (Chaukhat) offers high durability, low moisture content, and low water absorption, as compared to conventional wood products. These properties have made it viable for use in railings, windows, doors, exterior siding, fencing, flooring, and interior molding, and raised its demand from automotive and construction industries.

CHALLENGES FACED BY COMPANY:

• Challenges related to Waste: Waste can be a major issue in plastic manufacturing as it can lead to higher costs and wasted materials. Waste is part of the manufacturing process but being efficiently reused by us.

• Challenges related to Cost: The cost of plastic manufacturing can be a major challenge as it involves many factors including raw materials, tooling, waste, and labor. Finding ways to reduce costs without sacrificing quality can be difficult.

These are some of the biggest challenges that manufacturers face when producing plastic products. By understanding the challenges and taking steps to address them, manufacturers can ensure that their plastic products are produced to a high standard.

RISKS AND CONCERNS:

The Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. The Company periodically assesses risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans across all its location. Risk evaluation is driven by Financial Objective, Overall Strategy, Companies Operations, Statutory Compliance and Reporting Objectives. This ensures business continuity and value creation on sustainable basis.

ENVIRONMENT HEALTH & SAFETY:

Company is making serious efforts for marketing of its products in global markets. With Indias growing importance as a low cost manufacturing base with good health, safety and environment practices, your company sees a great potential in many of its products. Effective steps have been taken in this regards.

PVC/WPC Foam Sheets, Boards & Door Frames(Chaukhat) are environmentally friendly solution compared to wood and possibly one of the many sustainable alternative to a lot of regular building materials. PVC/WPC is used today with a lot more potential than any other similar products.

Further, the Company ensures the health, safety and wellbeing of its employees, contractors, assets and customers property.

FUTURE OUTLOOK

The Company continued its focus on marketing activities and strengthening its agent network by participating in many new markets. Your company has introspected with its customer base and greatly recognizes the need for innovations and new product developments to drive growth and better margins.

The expansion of the Indian economy has boosted the demand for real estate and commercial buildings in the country. While residential building accounts for most of the real estate in India, commercial construction has increased to meet the growing need for office space, which has led to increase in consumption of PVC foam Board and door frame as well as increase in demand of electricity which ultimately result in increase in demand of our Industrial raw material for power cable across the world.

The Company has taken various initiatives and proactive steps to increase the production of the Company, which may leads to upsurge in profit.

SEGMENTWISE PERFORMANCE

The business activities of the Company comprise in various business segments i.e. Industrial Intermediate goods, Consumer Goods and other.

1. INDUSTRIAL INTERMEDIATE GOODS comprise of Raw Material for HT-LT Power Cable & Telecom Cables and irrigation products.

Raw Material for HT/LT Cables & HDPE/PVC Pipes, PVC Filler, PP Filler, PVC Compound, PVC Tape, LDPE/HDPE Tape, Polyester Tape, Identification Tape, Aluminium Mylar Tape, Hot Foil Sequential Marking Tapes, Numbering Tapes.

2. CONSUMER GOODS comprise of Manufacturing of PVC/WPC Foam Board, Doors & Door Frames (Chokhat) used as replacement of Wood and wood products like Ply Boards and wooden doors.

3. OTHER GOODS comprise of trading of raw material, Job work, Rental Income and other income.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company always strives to strengthen Internal Control Systems and processes for smooth and efficient conduct of business and complies with applicable relevant laws and regulations. A comprehensive delegation of power exists for smooth decision making. Elaborate guidelines for preparation of accounts are followed for uniform compliance. Further, all the key functional areas are governed by respective operating manuals. In order to ensure that all checks and balances are in place and all Internal Control Systems are in work, experienced firm conducts regular and exhaustive internal audits if accountants in close co-ordination with the companys concerned accredited officials. The Internal Financial Control are reviewed periodically and in particular the Internal Auditors ensure that the company as in all material aspects, laid down Internal Financial Controls including operational controls and that such controls are adequate and operating efficiently.

HUMAN RESOURCES

Industrial Relations with staff and workmen at Head Office and across all the plants, continued to be cordial. Your Company has successfully aligned human capital with business and organizational objectives. The emphasis has been on teamwork, skill development and development of leadership and functional capabilities of the employees. As on 31st March, 2024, there were 690 employees recorded on the payroll of the Company.

FINANCIAL PERFORMANCE

The financial statements have been prepared in accordance with the requirement of the Companies Act 2013, and applicable accounting standards issued by the Institute of Chartered Accountants of India. The details are mentioned below:

	(Amount in lakhs)
Particulars	2023-24	2022-23
Revenue from operations	13734.75	10130.48
Other income	110.92	112.87
Total Revenue	13845.67	10243.34
Total expenses	13504.38	10166.63
Profit before tax	319.75	56.39
Profit after tax	224.33	51.12

FINANCIAL REVIEW (INR in Lakhs)

Revenue from Operations:

During the year 2023-24 the total revenue of our company has increase to Rs 13845.67 Lacs as against Rs 10243.34 Lacs in year 2022-23.

Total Expenses (INR in Lakhs)

Total expenses consists of Material consumed, Cost of trading goods, change in value of stock of Finished Goods/Work-in-process, Employee Benefit Expenses, Finance cost, Depreciation & Amortization expenses and other expenses. During the year 2023-24, the total expenses were increased to Rs 13504.38 from Rs 10166.63 as compared to year 2022-23.

Employee benefit expenses (INR in Lakhs)

Expenses incurred on directors remuneration, employee remuneration and employee welfare expenses during the financial year 2023-24 was Rs 821.28 and in 2022-23 it was Rs 544.09

Finance Cost (INR in Lakhs)

Expenses incurred on finance and interest cost during the financial year 2023-24 increases to Rs 280.64 from Rs 213.79 in financial year 2022-23.

Depreciation & Amortization expense (INR in Lakhs)

During the year, 2023-24 depreciation and amortization expense of our company has increased to Rs 210.77 as against Rs 183.09 in year 2022-23 showing an increased.

Profit after Tax (INR in Lakhs)

The PAT is increased in Financial Year 2023-24 to Rs 224.33 as compared to Rs 51.12 in Financial Year 2022-23.

CAUTIONARY STATEMENT

Statement in this report, particularly those which relate to Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, expectations or predictions are "forwardlooking 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 global and Indian demand-supply conditions, feedstock availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.