bansal roofing products ltd Management discussions

Your directors have pleasure in presenting the Management Discussion and Analysis Report for the year ended on 31st March 2022.

I. Overview

The objective of this report is to convey the Managements perspective on the external environment and Pre-engineering Building and Roofing 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 the FY 2021-22. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Integrated Report. 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.

II. External Environment

1. Global Economy

The global economy staged a strong rebound at the start of financial year 2021 driven by accelerated vaccination and opening of economies. It was short-lived though as rising infections and re imposition of lockdown dampened sentiments in 2nd quarter. Government and central banks in major economies continued to extend the policy support to stabilize the economy and boost private investment and consumption. However, supply chain disruption leading to commodity inflation, energy price volatility coupled with rising freight and shipping cost enhance the inflation. Rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated. In beginning of year 2022 conflicts between Russia and Ukraine reached to highest level result in to more inflation.


The IMF (International Monetary Fund) has moderated its CY 2022 Global economic growth forecast by 0.8% to 3.6% from the estimated 4.4% growth forecast, published in January 2022, due to the Russia Ukraine Conflict, inflation and monitoring policy tightening and supply bottlenecks. Global growth is projected to slow-down from an estimated 6.1% in 2021 to 3.6% in 2022 0.8 percentage-point lower than what was envisioned in the last World Economic Outlook (WEO) of January 2022, largely reflecting forecast markdowns in USA and China.

The economic sanctions imposed by developed economies on Russia following the war with Ukraine, are likely to lead to re aligning to the trade relations there by impacting the global supply chain. Elevated inflation is expected to persist longer, with ongoing supply chain disruptions and high energy prices continuing in 2022. Risks to the global baseline are tilted to the downside which is primarily brought by the new COVID-19 variant which may prolong the pandemic and induce renewed economic disruptions. Moreover, supply chain disruptions, energy price volatility and localized wage pressures have enhanced the uncertainty around inflation and policy paths. Other global risks may crystallize with the surging geopolitical tensions, and the ongoing adverse climate conditions leading to the probability for natural disasters. With the pandemic continuing to maintain its grip, the emphasis on an effective global health strategy is more salient than ever. Worldwide access to vaccines, tests and treatments have become essential to mitigate the risks posed by new variants of COVID-19. Monetary policy in many countries will need to curb inflationary pressures, while fiscal policy will need to prioritize health and social spending.

2. Indian Economy

Amidst the challenges brought by the COVID-19 pandemic leading to disruptions in supply chain and surging inflation rate, the Indian Government introduced various policies to cushion the impact on the domestic economy and in specific vulnerable sections of society and the business sector. Because of the high export orders received by Core steel producers in India, the company like us has faced price volatility and disrupt supply of basic steel i.e. HR, CR, G.P. and long products. Through its policies, the Government significantly increased capital expenditure on infrastructure projects to build back medium-term demand and aggressively implemented supply-side measures to prepare the economy for a sustained long-term expansion. With the vaccination programme having covered the majority of the population, recovering economic momentum and the likely long-term benefits of supply-side reforms in the pipeline, the Indian economy grew 8.7% in financial year 2021-22 despite a significant moderation during the 4th quarter, on account of the pandemic-led disruption, rising domestic inflation, and the ongoing Russia-Ukraine conflicts.

III. Business Segment Overview

Roofing Market Segmentation

Steel roofing is a robust protection to Residence, Industries, and Warehouses for covering the top. It protects the structure, Machine, Material beneath it and is long lasting. Globally steel roofs are replacing other roofs very fast because it is strong, aesthetically good, has long life and is cost effective.

Steel Roofing:

On the basis of material, steel roofs are likely to account for a significant share in the market. The steel roofs are witnessing increased demand as they provide resistance to fire and imparts strength and durability to the structure due to their superior quality. The increasing inclination of Industry owners, builders towards steel roofs is expected to propel the demand for the material, thus, aiding the overall market growth. As steel roofs can lower energy consumption, can be recycled, and reduce a homes carbon footprint, the material is expected to be one of the most preferred components towards structuring a building in the coming years.

The technological advancements and the introduction of new roofing technologies are likely to be the major factors driving the roofing market growth in India. These advancements include Colour coated green roofing, which provides various advantages such as absorption of rainwater, insulation, and offering an aesthetically pleasing landscape.

The India roofing market is being driven by the rapid urbanisation, growing construction activities, and growing technological advancements in the country. Aided by the growing R&D activities towards the introduction of new roofing technologies, the market is anticipated to grow at a CAGR of 10% in the forecast period of 2022-2027. The market is projected to reach INR 80 thousand Crore by 2026. Contribution of Steel roofing is approximately 15% of total roofing need.

Pre- Engineered Steel Building Industries

The Indian PEB market continue to grow. It takes lesser time than the conventional steel concrete building, cheaper and mobility. The market growth can be attributed to various government initiative focusing on overall economic growth through manufacturing and infrastructure development which has resulted in increased demand for steel structure in all the segment.

The global PEB industry is likely to grow at CAGR of 10 percent, mainly driven by the Industrial and warehousing demand.

Asia Pacific holds the maximum market share of prefabricated buildings in terms of revenue mainly due to high economic growth rate and urbanization in emerging countries such as India, China, and Indonesia.

One of the major segments boosting the demand for PEB structures is warehousing.

As PEB comes with wide space and huge floors, with fewer columns and bars for interruptions, its great concept and helpful for many enterprises who want such requirements. PEB also allows for greater reusability of building materials with almost 95 percent of the material recycled and reused.

Study says Global Market of PEB is INR 4.5 Lakh Crore.

Key Growth Drivers for pre-engineered buildings market

Increased focus towards green building:

Various construction companies across the globe are taking initiatives to reduce the energy consumption levels in their buildings and achieve green building certifications such as LEED (the US Green Building Councils certification) and BREEAM (the UK-based Building Research Establishment Environmental Assessment Method). There are various technologies that make PEB a less waste producing and energy consuming process ad compared to traditional construction.


PEBs are eco-friendly as its components are manufactured from hot rolled steel sheet. Since steel is one of the worlds most recycled material, therefore, depending on the manufacturing process, close to 95 percent of the components of a newly manufactured steel product can be recycled.

Better adoption of Building Information Modelling (BIM):

Increased adoption of BIM across various nations has also triggered the usage of prefabricated construction, as BIM would make the design flow easier and provides data-centric information based on the design, specification, and construction issues. In addition to all the other benefits, the usage of BIM to track time, errors, and the cost is a major benefit driving the pre-engineered buildings market in all regions

Warehousing needs:

The high growth in retail e-commerce sector has triggered a huge demand for warehouses across the globe. There is an increased inclination towards the use of prefabricated steel buildings to meet the warehousing needs, as it saves a lot of time and cost given for the fixed design of a warehouse. Due to this increasing demand, the pre-engineered building market has seen a lot of local, small players enter into the prefabrication market.

Demand Outlook:

The construction sector has remained more resilient than the manufacturing sector to the pandemic shock. However, in many developing economies, construction activity was severely disrupted by a total stoppage of projects. However, in 2021, backed with domestic policies, the global construction sector remained resilient to the impact of pandemic. The sector saw robust recovery backed by low interest rates and domestic governments focusing on infrastructure projects. However, the recovery plans were affected by two conflicting forces.

While few governments, especially in developing nations, pumped in funds in infrastructure sector making it a recovery tool aligned with green initiatives, on the other side, governments were hit with poor fiscal standing due to the pandemic, thereby affecting the ability towards financing infrastructure projects.

Pre-Fabricated Buildings & Cost Structure and Price Drivers

Raw Material

Steel is one of the major raw materials in a PEMB building and even a small fluctuation in price would affect the final price of the building.

The manufacturing location of the pre-engineered metal buildings structure is also a strong determinant of the cost of the pre-engineered steel buildings structure.

The demand-supply situation for steel in the country would impact the steel price. E.g., If the domestic production is unable to meet the demand, then the price is bound to increase as the shortage would be sufficed through the steel import from other countries, which would definitely be higher than the domestic price.

Other Factors

The other factors resulting in price increases would be the extent of infrastructure facility in the construction location, which would impact the logistics cost.

There are several anti-dumping duties imposed by western countries on Chinese imports which is a key cost parameter.

The choice of contracting method has a huge impact on the final cost. Choosing a broker who bids from manufacturer would increase cost. It would be best to contract directly with the manufacturer thereby enabling better control over the final product.


Major Highlights

The analysis of major items of the financial statements is given below:

1. During the year under review, the Company recorded a Profit after Tax of Rs. 39.39 million as against Rs. 22.52 million of FY 2020-21. An increase of 16.87 million (75%) in PAT primarily due to high demand of our product & Services and increase in price of raw material of the Company as compare to the previous financial year.

2. The Basic and Diluted Earnings per share for the Financial Year 2021-22 was Rs. 2.99 as against Rs. 1.70 of previous financial year.

*The Company issued Bonus Shares in the ratio of 3:1 to shareholders of the Company in FY 2021-22. And therefore EPS of F.Y. 2019-20 and F.Y. 2020-21 has been restated according.

3. During the year under review revenue from operations was higher by 74% as compared to the previous financial year. The same were Rs. 727.37 million in FY 2021-22 as against Rs. 417.30 million of FY 2020-21. The increase in revenue was because of high demand due to slow down of COVID and also due to increase in price of raw material in the market.

4. The EBITDA of the Company was Rs. 58.94 million as against Rs. 35.17 million of previous financial year. The increase in EBITDA was due to increase Revenue.

5. The Net worth of the Company is increased by Rs. 36.09 million as compare to F.Y. 2020-21. The increase in net worth was due to increase in paid Share capital of the Company by further issue of shares by way of Bonus to the existing Shareholders of the Company in the Ratio of 3:1.

6. The stock of Raw Material in the current financial year was higher by 35.77 million as compared to the previous financial year. The increase in stock in trade was due to orders in hand and we need to store material to overcome the price rise.

7. During the year under review, the Cost of Material Consumed was increased by Rs. 297.87 million as against the previous year. The increase in cost of material consumed was due to higher cost of consumption of raw materials owing to higher prices and higher consumption due to higher production.

8. During the year under review, the Depreciation & amortisation expenses was increased by 20% as compared to the previous financial year. Reason for increase in cost of deprecation was due to addition of Unit 2.

9. During the year under review, the cost of financing increased by almost 60% as against the FY 21. The primary reason behind the same was due to the utilization of credit facilities extended by bank. The credit facilities were in the form of term loan for addition of unit 2.

In line with Companys long-term vision to attain leadership position in India & to increase the capacity, the Company has started the production of PEB in phase 1 of Unit-II in 4th Quarter of FY 2021-22. The Company continues to focus on attractive opportunities to deploy capital optimally to increase the future returns of the business. This project (Unit 2) will enhance the downstream capabilities, increase value added capacities and reduce costs. Besides these the compliance related projects on improving the Environment related parameters were pursued.

V. Strategy

During the year under review, BRPL continued to focus on operational and marketing excellence to achieve its aspiration of becoming the most reputed and valuable Roofing and PEB Company. Steel buildings are the fastest systems of industrial construction today and are popular all over the world in the form of Pre-engineered Buildings (PEB). PEBs are custom-designed, expandable, durable and maintenance free. Construction activity, including those of industrial and commercial buildings, is likely to gain momentum over coming quarters. With a clear shift towards PEBs from conventional structures, the PEB segment would grow faster.

PEBs are delivered as a complete finished product to the site from a single supplier with a basic structural steel framework with attached factory finished cladding and roofing components.

PEBs have hit the construction market in a major way owing to the many benefits they possess. They exemplify the rising global construction, technology and while they oppose the practice of conventional building construction they simultaneously have taken it to a higher level too.

One can see their optimal use in warehouses, industrial sheds, sports facilities, air ports, etc.

VI. Risks and Concerns

BRPL operates in a world with stringent regulatory and environmental requirements, increased geopolitical risks and fast-paced technological disruptions that could have a material impact across the value chain of the organisation. The business is also dependent upon the policies of the Indian government and any change whether positive or adverse, has a direct impact on the Companys business.

The Companys operations require substantial amount of raw materials and the same are exposed to volatility and fluctuations in prices and availability. Competition from the unorganized sector with questionable standards and high transportation costs are also one of the concerns in the construction industry.

VII. Internal Financial Control Systems and their Adequacy

The Company has an Internal Financial Controls (‘IFC) framework, commensurate with the size, scale, and complexity of the Companys operations. The Board of Directors of the Company is responsible for ensuring that Internal Financial Controls (IFC) have been laid down by the Company and that such controls are adequate and operating effectively. The internal control framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorized use, executing transactions with proper authorization and ensuring compliance with corporate policies.

The Companys internal financial control framework is commensurate with the size and operations of the business and is in line with requirements of the Companies Act, 2013. The Company has laid down Standard Operating Procedures and policies to guide the operations of each of its functions. Business heads are responsible to ensure compliance with these policies and procedures. Robust and continuous internal monitoring mechanisms ensure timely identification of risks and issues. The management, statutory auditors and internal auditors have also carried out adequate due diligence of the control environment of the Company through rigorous testing.

VII. Statutory Compliance

The Company has in place adequate systems and processes to ensure that it is in compliance with all applicable laws. The heads of the Company is responsible for implementing the systems and processes for monitoring compliance with the applicable laws and for ensuring that the systems and processes are operating effectively. The Company Secretary and Managing Director, places before the Board, at each meeting, a certificate of compliance with the applicable laws. The Company Secretary & Managing Director also confirms compliance with Company law, SEBI Regulations and other corporate laws applicable to the Company.