bharat wire ropes ltd share price Management discussions

I. Overview

The Management Discussion and Analysis Report has been prepared in accordance with the provisions of Regulation 34(2)(e) of Listing Regulations, read with Schedule V(B) thereto, with a view to provide an analysis of the business and Financial Statements of the Company for FY 2022-23 and 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 objective of this report is to convey the Managements perspective on the external environment and our 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 2022-23. 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

As per International Monetary Fund (World Economic Outlook Apr 2023), the Global economic growth slowed down to 3.4% in 2022 as per compared to 6.2% in 2021. The year saw geopolitical uncertainty with the prolonged Russia-Ukraine conflict and economic challenges leading to disruptions in the global supply chain and elevated inflation with increase in commodity and energy prices. This prompted central banks to aggressively tighten their monetary policy, which further impacted economic activity.

Surge in commodity and fuel cost triggered energy crisis in Europe and hampered economic activity. Aggressive monetary tightening by US Federal Reserve weighed on investment and economic activity and led to decline in business confidence. Global trade remains largely subdued due to global supply chain disruptions and bottlenecks in international freight movement along with weakening external demand.


As per estimations of Analysts, the above reasons will lead to further slowdown in economic growth and a mild recession in the UK as well as potentially in the Europe. In the developed economies, inflation is slowly easing but it is still high enough to push consumption levels lower and keep interest rates elevated. In emerging economies, disinflation is proceeding more rapidly, especially for producer prices.

Current estimates project global recovery in the second half of 2023, with moderation of inflation. We have already started seeing cooling-off of fuel and commodity prices as well as global container freight rates.

According to the International Monetary Fund (IMF), GDP growth is forecasted to drop from 3.4% in 2022 to 2.8% in 2023 and settle at 3.0% in 2024. Advanced economies should anticipate a considerable growth decrease, from 2.7% this year to 1.3% the following year. Global headline inflation is expected to drop from 8.7% in 2022 to 7.0% in 2023 because of lower commodity prices, even as core inflation is likely to decline slowly.

2. Indian Economy

Despite of global volatility, the Indian Economy witnessed a growth of 6.8% in FY 2022-23 making a remarkable recovery in the post-Covid environment and delivering one of the best performances in terms of economic output. The Indian economy remained remarkably resilient to external environment owing to ongoing policy reforms and prudent regulatory measures which ensured strong macroeconomic fundamentals and helped the country navigate global and domestic challenges. Expansion of manufacturing footprint by both global and Indian firms, aided by Government policies and higher government spending on infrastructure sector supported investment growth during the year. Strengthening of Indias digital infrastructure in the last few years and the widespread adoption of real-time digital payments also contributed to the growth of the country.

However, monetary tightening by the RBI, widening of current account deficits and decline in growth of exports capped economic growth prospects. Inflation headwinds were also felt by the Indian economy with increase in crude oil prices. The Indian rupee weakness against the US dollar also added to the inflationary pressures. Entrenched inflation may prolong the tightening cycle, and therefore, borrowing costs may stay higher for longer.

III. Industry Structure and developments:

The Indian Steel & Wire Manufacturing sector witnessed positive growth momentum on the back of increased government spending in infrastructure development as well as private sector investments in Steel Industry. The primary growth drivers for steel wire ropes in India have been infrastructure development, increased industrial activity, enhanced emphasis on shipping and port sector along with growth in the mining industry. Rapid advancements in Industrial technologies and government schemes have also attributed in driving the market growth.

1. Our Business:

Bharat Wire Ropes Limited ("the Company") is a leading steel wire rope manufacturing company established in the year 1986. Wire ropes are a value-added product, formed from wire rods.

The wire ropes, Slings, Spiral Strands are used in general engineering, fishing, elevators, cranes, material handling, power transmission, suspension bridges, onshore / offshore oil exploration, ports and shipping, mining, defence, railways and allied industries. The Company caters to a rich mix of clients ranging from Overseas Consumers, Private Players, Government and Semi - Government Organizations. Providing service to a variety of clients has helped the company develop versatility which makes it better equipped to handle diverse / heterogeneous kinds of enquiries. In the current fiscal year the performance of the company has improved on the account of higher productivities, improved pricing, value added products and addition of new customers, The Company expects continuation of trend in the future also.

2. Segment-wise or Product-wise performance:

The Company is engaged solely in the business of manufacture and sale of Wire & Wire Ropes.

3. Business Strategy:

i. Expansion of Companys presence in the domestic markets:

The Company is undertaking various marketing activities to expand and enhance its presence in the existing business segments by identifying markets where it can provide cost effective, technically advanced products to its clients. The Company envisage to have close contacts with major end-users to provide greater client-interfacing. Further, the Company has successfully been awarded and it has certified product approvals/registrations from BIS for steel wire ropes and strands etc., and with major engineering consultants and equipment suppliers. ii. Focus on development of international markets for the Companys Products: The Company has a significant presence in global markets in European countries, US, Middle East, Nepal, New Zealand, Australia, Singapore, South Africa, Vietnam and many more. The Company have machines mainly from South Korea and Germany which provides a cutting edge while competing with the global manufacturers. The Company has considerably strengthened its market position in North America, acquiring a strong foothold in the North American Wire Rope Market & we continue to grow our market share in this region owing to our competitive business model & immense value creation for our customers in this region. iii. Strengthening of product portfolio and developing capabilities to manufacture a wider range of products: The company has strengthen the product portfolio by developing capabilities to manufacture a wider range of products. To provide quality product at reasonable prices has always been the ultimate aim of the Company. The Company manufacture all wires at its plant in Chalisgaon, thereby eliminating the dependency on the limited types of wires available in the market and enabling the Company to manufacture and offer an increased range of high quality wire rope products, including but not limited to marketing high performance crane ropes for ports, large diameter spiral strands for structures and bridges, elevator ropes, high performance mining ropes, long-life-cycle fishing ropes, onshore and offshore ropes, swaged ropes and special ropes for construction sector. Further, strategic efforts have been made to focus on improving marketing enhancing productivity and maximizing plant utilization by minimizing wastage, reducing material holding costs and focusing on sustainable operations. We continue to create consistent value through capacity expansion, technological innovation, and sustainable manufacturing techniques. iv. Meeting Quality Standards and developing customer focus: Providing quality products at reasonable price has always been the ultimate aim of the Company. The Company has in place the strategy which supports Total Quality Management. Companys technically qualified persons are determined to achieve the objective of zero defects and minimal rejection. The Company has testing facilities to ensure that all our products are thoroughly tested prior to dispatch from our factory so that grievances can be minimized.

Chalisgaon Plant:

Company has been accredited with ISO 9001, ISO 14001 and ISO 45001 certifications by TUV SUD South Asia Private Limited.

Company has achieved a major milestone by getting the approval of LLOYDS Register for the plant at Chalisgaon and approvals from Bureau of Indian Standards (BIS) to put ISI mark on the products confirming to IS: 2266,IS:2365, IS: 4521, IS: 1835, IS 1855, IS 1856 & IS: 10891/Part 1. It has also received approval from Power grid Corporation of India Limited for manufacturing 7strand G S Earth-wire." Company also has CE Certification for Chalisgaon Plant.

Atgaon Plant:

Company has been accredited with ISO 9001certification by TUV SUD South Asia Private Limited for our Atgaon plant. Plant is approved by Central Organization Railway Electrification (CORE) Research Designs &Standards Organization (RDSO) for various rope products.

Plant has received approvals form Bureau of Indian Standards to put ISI mark on the products confirming to IS: 2266. It has also received Approval from Power grid for manufacturing 7 strands & 19 Strands G S Earth-wire.

Atgaon Plant has received Works Approval Certificate from Indian Register of Shipping for Manufacturer of Steel Wire Ropes for Life Boat Fall used on ships.

IV. Opportunities and Threats

The governments emphasis on Make in India to create Atma nirbhar Bharat has reduced dependence on import and increased domestic demand for manufacturing in India. In 2021, a new scheme under Make in India was launched to promote MSMEs in the exports market. With increased private participation in steel industry, the government continues to introduce favorable schemes to encourage development in this industry.

With the government focusing on initiatives to boost economic growth, aiding infrastructure creation should be a key focus area. Rise in mining and quarrying sector will also augment the steel wire ropes in market in India.

The market for steel wire rope is at a matured stage, with a limited number of players dominating the market. Steel Wire ropes are used dynamically for lifting and hosting in applications, and for transmission of mechanical power. A series of government projects to be launched which can provide impetus to the construction and allied industries and consequently to the steel wire rope market. It has been anticipated that steel wire ropes production will meet the domestic market demand owing to year-on-year increase in production capacities of the companies. The aim of the government is to improve living standards across major cities in India. The aims at improving infrastructure facilities in urban areas in the country which will drive the demand of steel wire ropes in India.

The resurgence in the Oil and Gas industry is expected to increase the number of oil rigs which will further add impetus to the growth of steel wire rope industry.

International customers have shown inclination to divert focus from China to India for procurement of wire ropes in view of recent political differences.

However, high debt levels of manufacturers and actual implementation of infrastructure projects remain a concern for the industry.

V. Risks and Concerns

We operate in a dynamic environment which not only provides opportunities but also exposes the business to various risks. To proactively identify and manage key risks for achieving our strategic objectives. Growth of the sector is depended on the enlargement of allied sectors. Forecasted plans and projections are subject to risk. Various kinds of risk associated with the development are Liquidity Risk, Market Risk, Regulatory Risk, Financial Risk, Market Risk and Operational Risk. Other dominant threats faced by the Company are in the form of competition it faces in the industry. In particular, the Company competes with other wire rope manufacturing companies, both in India and abroad, on the basis of a number of factors, including but not limited to quality, time of delivery and price. Fluctuations in the price, availability and quality of raw materials used in our manufacturing process could have a material adverse effect on cost of sales or the Companys ability to meet customer demands. There can be no assurance that the Company will always be successful in its efforts to protect the business from the volatility of the market price of raw materials, and the business can be affected by dramatic movements in prices of raw materials.

Risk is the vital factor of every business. The Company has in place a Risk management Committee which outlines the amount of risk involved in the business and various techniques for risk mitigation & Risk minimization. The Company believes that managing risks helps in maximizing returns. The Companys approach for addressing business risks is comprehensive and includes identification of Risks, periodic review of such risks and measures to for mitigating such risks.

Key Risks

Impact on the Company Mitigation
A Slowdown in Economic Growth Economic factors like increase in rate of inflation, scarcity of credit, increases in commodity and energy prices other factors such as political or regulatory action, including adverse changes in liberalization policies, business corruption, social disturbances, terrorist attacks and other acts of violence or war, natural calamities may impede Companys growth and expansion plans. Companys operations and financial condition may be adversely affected by, conditions in financial markets in the global economy. To constantly review the changes in economic conditions and plan to mitigate the same.
Changes in Technology Inability to keep pace with the rapidly changing Technological Environment adversely affect the Companys ability to compete efficiently, reduce competitiveness, ability to develop new products and the consequential quality of Companys products, and could also adversely affect sales and profitability. • To anticipate and respond on a timely basis and economical basis to technological advances in the sector which Company operates. • Preventive maintenance activities will only be productive. • Company needs to establish a process for monitoring lifecycle stages of equipment.
Supply of Raw Material Disruption of supply of raw materials from our suppliers will adversely affect Companys operations and ability to deliver products on a timely basis. To enter into an understanding with the suppliers in respect of long term supply of raw material. Monitor price movement regularly and keep inventories of 2- 3months
Fluctuation in Cost of raw Material The prices of Raw Material are subject to price fluctuation which may affect the Profitability and reduce supply leading to increase in supply costs due to which financial performance may be materially and adversely affected. • Timely anticipation of fluctuation in supply cost. • Adapt to changing supply cost and adjusting purchasing practices accordingly to be able to negotiate favorable pricing terms with suppliers for such raw material.
Industrial Actions The Company is exposed to strikes, work stoppages or increased wage demands by the employees or any other kind of disputes with employees of the Company could adversely affect its business and results of operations. • Be Proactive in addressing disputes & grievances. • Address the issue as soon as the employee raise them.
Maintenance of adequate health and safety standards Company is subject to the risk of industrial accidents which could have significant adverse consequences for Company‘s workers and facilities, as well as the environment. Such incidents could lead to production stoppages, the loss of key assets, or put at risk employees (including those of sub- contractors and suppliers) or persons living near the affected site. In addition, such incidents could damage Company‘s reputation, leading to the rejection of products by customers, These events could have a material adverse effect on the Companys revenues, results of operations, profitability and cash flows and diversion of management time into rebuilding and restoring its reputation. • Prevent worker contact with all rotating or moving machinery by using guards, enclosures, or guarding devices between the worker and the machine.

• Implement a lockout procedure. This will ensure that power to equipment is completely disconnected and cannot be reconnected while someone is working on the equipment

VI. Internal Control System and their adequacy:

Company has in place robust Internal Control system to maximize the effectiveness and efficiency by including activities that are tailored to the nature, size and complexity of the entity. The Company follows proper hierarchy for reporting of routine activities. Direct access to the senior Management is available in extreme cases. The Company has framed whistle blower policy to report concerned areas to the Management.

The Companys internal control system commensurate with the size, scale and complexities of its operations. The Audit Committee actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same.

The Company has appointed an independent firm of chartered accountants to monitor the internal audit of its activities, based on an internal audit plan, which is reviewed each quarter in consultation with the statutory auditors and approved by the audit committee.

Management is responsible for establishing and maintaining internal financial controls. The Company has adequate Internal Control system with reference to financial statements and to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

VII. Internal Audit

Internal Audit at the Company is an independent and objective activity designed to provide assurance to senior management and add value by identifying opportunities to deliver business benefits and improvements to internal controls. It helps us accomplish our objectives by bringing a systematic and disciplined approach to evaluating and improving the effectiveness of processes, controls, and governance. The internal audit function carries out a focused and risk-based annual internal audit plan approved by the Audit Committee.

VIII. Financial Performance:

The Financial statements of the Company are prepared in Compliance with the Companies Act, 2013 and significant accounting policies used for the preparation of financial statements are disclosed in the notes to financial statement.

Historical Financial Performance (Rs. in Lakhs)


FY23 FY22 FY21

Revenue from Operations

58,906.45 41,067.90 25,017.47
Total Expenses 45,024.78 34,850.00 21,772.98


13,881.67 6,217.90 3,244.49
EBIDTA Margins (%) 23.56% 15.14% 12.99%
Depreciation and amortisation expenses 2,065.68 2,144.12 2,168.70
Finance Cost 2,219.89 2,339.03 3,407.12
Other Income 66.93 58.04 51.09


9,663.03 1,792.79 (2280.24)
Tax 3,437.87 426.24 (601.52)


6,225.16 1,366.55 (1678.72)
PAT Margins (%) 10.56% 3.34% NA
Other Comprehensive Income 189.21 (18.52) (20.56)

Total Comprehensive Income

6,414.37 1,348.03 (1,699.28)
Diluted EPS 9.68 0.47 (3.73)

Revenue from Operations:

Revenue for the year is higher by 43.44% YOY basis on account increase in production and sales realization.

Profit before Depreciation, Financial Cost, Exceptional Items and Tax (PBIDT):

PBIDT is higher on account of higher sales realization, better margin and effective cost control

Finance Cost:

Finance cost has decreased on account of decrease of borrowings.



FY FY Remarks
2022-2023 2021-2022
Debtors Turnover Ratio 11.68 9.55 Improved on account of faster recovery from debtors
Inventory Turnover Ratio 2.99 3.23 Operating at same levels
Interest Coverage Ratio 6.28 2.68 Improved on account of higher PBIDT in current year
Current Ratio 3.82 1.96 Improved on account of investment of profits into operations
Improved on account of repayments of borrowings and
Debt Equity Ratio 0.32 0.60
increase in networth
Operating Profit Margin (%) 20.17 10.06 Improved on account of improvement in operational levels.
Improved on account of increase of operations, cost controls,
Net Profit Margin (%) 10.57 3.33
higher realization.
Improved on account of increase of operations, cost controls,
Return on Net worth 11.11 3.03
higher realization.


Historical Balance Sheet


FY23 FY22 FY21 Particulars FY23 FY22 FY21


56,016.87 45170.66 43515.99 Non-Current Assets 50,705.21 55,830.26 57,843.54
(a) Equity Share Capital 6,789.75 6383.00 6257.32 (a) Property, Plant and Equipment 48,089.27 49,146.86 51,262.97
(b) Other Equity 49,227.12 38787.66 37258.67 (b) Capital Work in Progress 306.21 12.38 37.18

Non-Current Liabilities

14,916.04 21,226.65 21,968.95 (c) Other Intangible Assets 29.35 3.50 4.56
(d) Intangible Assets under
(a) Financial Liabilities 43.00 29.25 24.90
(i) Borrowings 14,266.44 20,651.10 21,434.50 Other Financial Assets 455.04 978.35 417.66
(ii) Other Financial Liabilities 368.63 325.00 325.00 (f) Deferred Tax Assets (Net) 1,422.81 4,802.41 5,238.75
(b) Provisions 280.98 250.55 209.45 (g) Other Non-Current Assets 359.52 857.52 857.52

Current Liabilities

7,185.53 10,979.58 9,166.83 Current Assets 27,413.24 21,546.63 16,808.24
(a) Financial Liabilities (a) Inventories 11,006.81 8,045.07 6,472.12
(i) Borrowings 3,902.97 6,234.20 5,955.69 (i) Trade Receivables 4,766.90 3,989.76 3,627.69
(ii) Trade Payables 1782.16 3,128.79 1,097.14 (ii) Cash and Cash Equivalents 3.81 287.27 49.28
(iii)Other Financial Liabilities 10.20 17.70 25.87 (iii) Other Bank Balances 869.06 33.25 485.78
(b) Other Current Liabilities 1,443.67 1,548.62 2,055.94 (iv) Other Financial Assets 72.49 96.41 110.95
(c) Provision 46.54 50.27 32.19 (c) Other Current Assets 10,694.17 9,094.87 6,062.43


78,118.45 77,376.89 74,651.77 TOTAL ASSETS 78,118.45 77,376.89 74,651.78

IX. Human Resource:

Human Resources are capital of the Company. It could be invested through education and training which leads to an improvement in the quality and level of production. The Company has always given importance for developing individuals as well as teams. The system followed is transparent and performance based and it endeavors to retain, develop and provide better working environment to the employees by providing an atmosphere of trusteeship, competition and challenge, thereby providing opportunities for personal and professional growth through training and ample career enhancement opportunities. The Company organizes and provides requisite training to its employees from time to time and periodical appraisal and rewarding systems are in put well in place.

As on 31st March, 2023, the number of permanent employed is 504 and there were 571 employees in contract basis and others.

Bharat wire ropes Limited has shown full commitment towards employees, investors, contractors, consultants and all related personnel by providing safe-working conditions along with other welfare measures.

X. Forward Looking statement

This document contains statements about expected future events, financial and operating results of Bharat Wire Ropes Limited, which are forward looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the Managements Discussion and Analysis of Bharat Wire Ropes Limiteds Annual Report, for FY 2022-23.

For Bharat Wire Ropes Limited For Bharat Wire Ropes Limited
Murarilal Mittal Mayank Mittal
Managing Director Joint Managing Director
DIN: 00010689 DIN: 00127248

Date: 25th April, 2023

Place: Mumbai