Bharat Wire Ropes Ltd Management Discussions.

I. Overview

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 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 enters 2022 in a weaker position than previously expected. As the new Omicron COVID-19 variant spreads, countries have reimposed mobility restrictions. Rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated, notably in the United States and many emerging market and developing economies.

In many countries, inflation became a central concern. In some advanced economies, including the United States and some European countries, it had reached its highest level in more than 40 years, in the context of tight labor markets. The ongoing tensions between Russia - Ukraine can hurt globally through multiple channels, such as tighter global financial conditions, elevated uncertainty and the risk of weaker global demand, higher commodity prices, especially oil. There is a rising risk that inflation expectations become de-anchored, prompting a more aggressive tightening response from central banks. For 2022, inflation is projected at 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies.


While the global economy has rebounded quite well since the start of the Covid-19 pandemic, global economic prospects have worsened significantly since International Monetary Funds last World Economic Outlook forecast in January 2022. The Covid-19 pandemic, the war in Ukraine and rising global inflation may severely set back the global recovery, slowing growth considerably.

Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022-23. This is 0.8 and 0.2 percentage points lower for 2022-23 than projected in January 2022, World Economic


Steel prices also witnessed an upswing during the year on the back of increased demand from recovering economies, supply restrictions by the Organization of Exporting Countries and the Ukraine- Russia war. The inflation forecast is subject to high uncertainty, principally related to the war and the pandemic. Inflation is expected to remain elevated for longer, driven by war-induced commodity price increases and broadening price pressures for 2022.

2. Indian Economy

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. Even though the second wave of the pandemic in April - May 2021 was more severe from a health perspective, the economic impact was muted compared to the national lockdown of the previous year 2020-21. Going forward in financial year 2022-23, global issues of supply chain disruptions, the Ukraine-Russia war and high inflation, remain the main concerns for India as well. Economic Survey predicted a GDP growth of 8.0-8.5% for the financial Year 2022-23

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. 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.

III. Industry Structure and developments:

It has been witnessed that Steel & Wire Manufacturing Industry is growing very fast. The demand of wires is expected to increase in leaps and bounds in the years to come. Steel Wire Rope industry in India has prospered owing to growth in infrastructure activities and demand in industrial sector. This growth was witnessed majorly due to government initiatives such as Pradhan Mantri Awas Yojana, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Smart Cities Mission, Delhi Mumbai Industrial Corridor (DMIC) and others. 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.

Steel demand is expected to be strong due to recovery in manufacturing businesses around the world and global fiscal stimulus supporting infrastructure projects. The Steel Industry will see exciting opportunities due to rapid developments through digitization and automation, infrastructure initiatives, reorganisation of urban centres and energy transformation.

While there was an overall reduction in production of steel during the initial months of the financial year which was mainly as a result of the second wave of covid, this was then followed by a good recovery in production and the monthly production has since reached pre-Covid levels.

The raw materials market in the FY 2021-22 was markedly volatile driven by policy changes and a shift in global trade flows primarily in the coal markets.

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, which falls in the long steel category of steel products. Over the years, with significant improvement in the strength of steel wire ropes manufactured, the usage of these steel wire ropes has significantly increased in various diverse applications.

The wire ropes is 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. In addition to the above Mechanically Spliced Slings, Hand Spliced Slings, Earth Wires, Stay Wires, Guy Wires and Spiral Strands. The Company caters to a rich mix of clients ranging from Overseas Consumers, Private Players, the entire Indian Defense Segment and 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 and addition of new customers in the International Market, the same trend is likely to continue 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. The Company believes that its ability to cater a wider customer base on account of its diversified product offering has enabled the Company to provide customization options to its valued customers. To further strengthen the Companys product mix, the efforts have been made to focus on niche sectors for providing wire ropes such as non-rotating ropes, suspension bridge ropes. The Company believes that its ability to provide a mix of high-value niche products along with being active in the volume segments has helped in balancing the Companys revenues.

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. The Company has received an award from Engineering Export Promotion Council of India (EEPC) for achieving export volume.

ii. Focus on development of international markets for the Companys Products:

The Company has a strong market presence in over 45 countries. Europe, the Middle-East, South Asia, Australasia & South America, South Africa continue to be the largest markets for our high quality products. Over the past four years, 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.

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 OHSAS 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: 4454 part 1. It has also received approval from Powergrid 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 9001 certification 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 variour rope products.

Plant has received approvals form Bureau of Indian Standards to put ISI mark on the products confirming to IS: 2266,iS: 9282 &IS: 12776. It has also received Approval from Power gridfor manufacturing 7strands & 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 favourable 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 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)
Particulars FY22 FY21 FY20
Revenue from Operations 41,067.90 25,017.47 25,771.47
Total Expenses 34,850.00 21,772.98 22,874.60
EBITDA 6,217.90 3,244.49 2,896.87
EBIDTA Margins (%) 15.14% 12.99% 11.25%
Depreciation and amortisation expenses 2,144.12 2,168.70 2,180.45
Finance Cost 2,339.03 3,407.12 8,946.95
Other Income 58.04 51.09 30.38
PBT 1,792.79 (2,280.24) (8,200.16)
Tax 426.24 (601.52) (2,104.40)
PAT 1,366.55 (1,678.72) (6,095.76)
PAT Margins (%) 3.34% NA NA
Other Comprehensive Income (18.52) (20.56) 0.96
Total Comprehensive Income 1,348.03 (1,699.28) (6,094.80)
Diluted EPS (Rs.)


(3.73) (13.56)

Revenue from Operations:

Revenue for the year is higher by 64.05% 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 restructuring and decrease of borrowings


Ratios FY 20212022 FY 20202021 Remarks
Debtors Turnover Ratio 9.55 6.30 Improved on account of faster recovery from debtors
Inventory Turnover Ratio 3.23 2.46 Improved on account of better Inventory Management
Interest Coverage Ratio 2.68 0.97 Improved on account of higher PBIDT in current year
Current Ratio 1.96 1.83 Improved on account of investment of profits into operations
Debt Equity Ratio 0.6 0.63 Improved on account of repayments of borrowings.
Operating Profit Margin (%) 10.06 4.5 Improved on account of improvement in operational levels.
Net Profit Margin (%) 3.33 (6.71) Improved on account of increase of operations, cost controls, higher realization and restructuring of borrowings.
Return on Net worth 3.03 (3.86) Improved on account of increase of operations, cost controls, higher realization and restructuring of borrowings.
Historical Balance Sheet (Rs. in Lakhs)
Particulars FY22 FY21 FY20 Particulars FY22 FY21 FY20
Equity 45,170.66 43,515.99 3,905.51 Non-Current Assets 55,830.26 57,843.54 59,833.44
(a) Equity Share Capital 6,383 6,257.32 4,495.22 (a) Property, Plant and Equipment 49,146.86 51,262.97 53,857.3
(b) Other Equity 38,787.66 37,258.67 (589.71) (b) Capital Work in Progress 12.38 37.18 37.18
Non-Current Liabilities 21,226.65 21,968.95 28,347.68 (c) Other Intangible Assets 3.50 4.56 5.56
(a) Financial Liabilities (d) Intangible Assets under Development 29.25 24.90 16.6
(i) Borrowings 20,651.1 21,434.5 27,850.53 Other Financial Assets 978.35 417.66 217.11
(ii) Other Financial Liabilities 325 325 325 (f) Deferred Tax Assets (Net) 4,802.41 5,238.75 4,641.48
(b) Provisions 250.55 209.45 172.15 (g) Other Non-Current Assets 857.52 857.52 1,058.22
Current Liabilities 10,979.58 9,166.83 42,979.05 Current Assets 21,546.63 16,808.24 15,398.83
(a) Financial Liabilities (a) Inventories 8,045.07 6,472.12 7,765.04
(i) Borrowings 6,234.2 5,955.69 12,737.58 (i) Trade Receivables 3,989.76 3,627.69 2,938.64
(ii) Trade Payables 3,128.79 1,097.14 1,080.78 (ii) Cash and Cash Equivalents 287.27 49.28 77.44
(iii)Other Financial Liabilities 17.7 25.87 27,410.38 (iii) Other Bank Balances 33.25 485.78 267.04
(b) Other Current Liabilities 1,548.62 2,055.94 1,718.64 (iv) Other Financial Assets 96.41 110.95 79.25
(c) Provision 50.27 32.19 31.67 (c) Other Current Assets 9,094.87 6,062.43 4,271.43
TOTAL EQUITY AND LIABILITIES 77,376.89 74,651.78 75,232.26 TOTAL ASSETS 77,376.89 74,651.78 75,232.26

VIII 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.

As on 31st March, 2022, the number of permanent employed is 540 and there were 721 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.

IX. Cautionary 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 2021-22.