INDUSTRY STRUCTURE AND DEVELOPMENTS
The Companys main business activities are manufacturing and sales of all types of
Optical Fibre Cables, Copper Telecommunication Cables, Structured Copper Cables, Specialty
cables and allied accessories.
The Financial Year 2022-23 started off well with consistent order flows and this trend
continued throughout the year under review there by contributing to the overall
performance in terms record revenue generation for the Company.
After the end of active pandemic waves since last 2 years, some resultant effect still
continued in terms of logistics issues which got over by the end of 2022.
TheCompanyhasloggedinwithincreasedrevenuegenerationcoupledwithenhancedprofitabilitylevelsduetorobustorderexecution
from domestic Structured Cable business and elevated performance from Export of Optical
Fibre Cables. Also, domestic orders for Optical Fibre Cables have reasonably contributed
to this enhanced performance in overall operations. As far as the capacity utilization is
concerned, both the segments of Optical Fibre Cables and Structured Copper Cables operated
at the highest levels which enabled this stupendous performance.
In general, there is no material change in the industry structure.
OVERALL REVIEW
Business Review and Outlook
Access to modern information and communications technology will continue to be a major
trend in 2023 across the globe and also in India as the Government of India deepens its
focus on 5G adoption. According to market reports, around 762 million Indians have not had
access to the Internet. As we begin to view the Internet as a utility to spur economic
growth, it is the right time for us to connect the unconnected. Networks are constantly
under pressure to meet the rising Data Consumption demand, while evolving in line with new
technologies and being acceptable for future growth. The rollout of Optical Fibre Cable
Network is becoming more and more important to take care of this increased data traffic.
Further, it is critical that everyone across the country has the same access to
opportunities brought about by broadband connectivity. Closing the digital divide will
facilitate the delivery of a wide range of services and applications for improving
business efficiency and productivity as well as enhancing everyday lives of millions of
population. Are cent Mc Kinsey report suggests that increased proliferation of digital
applications across key sectors could double their gross domestic product (GDP) level to
between US $ 355 billion and US $ 435 billion by 2025.
In 2023, network providers will continue to work closely with government agencies to
bridge this urban-rural digital divide. The Indian government also announced a US $ 30
billion investment in 2022 to ensure last-mile accessibility to 4G and 5G services. This
reaching benefits to the citizens of India, both economically and socially. The future
definitely looks promising for all and this can make broad band for everyone a reality.
As the internet is increasingly becoming an everyday necessity for India, there is
still much to be done for 5G telecommunication network development. With economic
disruptions, consumers are likely to be forced to start making decisions about the types
of benefits of improved digital connectivity that comes with 5G. Furthermore, 5G is
expected to enhance the mobile broadband user experience and enabled to grow by
US$12billion every three years. However, 5G will need to expand into more use cases and
applications. For this purpose, the industry will selectively
implement5Gstandalonenetworkcapabilitiestounlockthefullbenefitsof5Gtechnology,including
support for latency-sensitive, high reliability and extended internet of things service
capabilities.
Such developments will provide greater access to online services, whether to stay in
connect with friends and family more easily or to run an efficient business from home or
corporate headquarters. Additionally, in 2022, very significant investments in
applications such as meta verse,web3, artificial intelligence(AI),machine learning(ML),Big
Data, Block chain technology, Cloud Computing, Drone Delivery, Internet-of-Things (IoT),
Logistics 4.0 and Robotics, driving data centre operators to focus on edge capabilities to
provide low latency access to data anywhere, at any time; and will, in time, have
increasing applicability in the Indian telecom market place with the transition to 5G.
To make all this happen in reality, the proliferation of Optical Fibre Cables Network
is very important and the Government of India is planning to connect the every nooks and
corners of the entire country through latest state-of-the-art Optical Fibre Cables Network
implementation schedule from 2024 onwards. This will enable the industry to reap the
benefits in a big way during the coming years and is slated to revolutionise the Digitial
Infrastructure of the country in massive scale.
Another major development happening in India is creation of large scale data centres to
cater to the huge needs of data handling capabilities. Asia Pacific(APAC) particularly in
the underserved and large domestic markets. India, is fast witnessing rapid growth in the
data centre proliferation and has evolved from an emerging market to a primary market for
data centres, with an estimated capacity of over 700 MW. Being a large, stable democracy
with increasing green energy investments, skilled manpower and low-cost locations for
setting up data centres, India is one of the most attractive markets for the industry.
Moreover, given that the countrys data centre capacity per million population is still
very low compared to its APAC peers, there is a high potential for further growth.
This augurs well for the telecom cable industry in terms of consumption of both Optical
Fibre Cables and Structured LAN Copper cables in huge volumes. The requirement of
Broadband networks to reach out to the end users is enabled by mix of both speciality
Optical Fibre Cables and Structured LAN Copper Cables as per the prevailing Network design
considerations which ultimately paves the way to reach out to the subscribers in an
effective manner.
Telecommunication Cables (A) Optical Fibre Cables (OFC)
There is a good increase in OFC business financialyear2022-23as which reached the level
of 39470.60lakhsduringthe compared to Rs 25803.76 lakhs in the previous year due to
increase in off-take especially from the long term customers of the Company from the
Exports segment and also from the Domestic segment. Out of this, exports also played as an
important contributor and it stood at the level of Rs 22325.32 lakhs during the financial
year2022-23.
(B) Copper Telecommunication/Structured Cables
The Companys sales turnover from Copper Cables and Structured Cables has witnessed
phenominal increase during the financial year 2022-23. The sales of this type of cable
increased to Rs 37663.99 lakhs during the financial year under review as compared to Rs
26092.78 lakhs in the previous year. The long term customer support and service being
provided by the Company is well recognized by the customers and the Company is
consistently improving its market share especially from the long term customers.
FINANCIAL REVIEW
(a) The revenue from operations increased by 47.95% to Rs 79219.75 lakhs during the
financial year 2022-23 as compared to Rs 53544.73 lakhs during the previous year,
primarily due to reasonable increase in order flow, especially from the long term
customers.
(b) The raw material consumption was higher by 0.90% as compared to previous year.
(c) During the year under review, the Finance cost has increased to Rs 1291.23 lakhs
in current year as compared to Rs 615.73 lakhs in previous year.
(d) The profit after tax for the year under review stood at Rs 3348.66 lakhs as
compared to Rs 2173.71 lakhs in the year 2021-22. (e) The Other Equity of the Company
stood at Rs 19998.29 lakhs for the year under review.
(f) The additions to the Fixed Assets of Rs 2324.22 lakhs during the year is mainly on
expansion of existing manufacturing capacity of the Company.
(g) For detailed information on the financial performance with respect to operational
performance, a reference may please be made to the financial statements.
(h) Details of significant changes in key financial ratios:
Ratios |
2022-23 |
2021-22 |
Variation |
Reasons for Change |
| Debt Equity Ratio (in Times) |
0.62 |
0.46 |
35% |
Change in Debt Equity Ratio is a result of increase in Debts availed due
to significant increase in Companys operations. |
| Return on Net Worth (in %) |
17.28 |
12.80 |
35% |
Increase in ROE is due to higher profit ability as compared to previous
Financial Year. |
OPPORTUNITIES AND THREATS
During the past years, rural internet connectivity has been expanding at an
unprecedented rate due to the rising affordability of smartphones, affordable data
tariffs, increasing government focus on expanding digital connectivity in rural areas and
rising coverage of telecom networks in these areas. Further, the changing dynamics after
the Covid-19 pandemic and increasing reverse migration have contributed to the growing
uptake of internet services in these regions. The most recent Economic Survey of 2022-23
highlighted this trend and stated that India has added more rural internet subscribers in
the past three years (2019-21) compared to urban areas. The number of rural internet
subscribers has reached 95.76 million while that of urban internet subscribers has reached
92.81 million. According to the survey, the Centres efforts to focus on bridging the gap
between rural and urban internet penetration have yielded positive results. The growth is
attributed to dedicated digital initiatives implemented across rural areas through
government schemes such as the Bharat Net project, Telecom Development Plan, Aspirational
District Scheme, Comprehensive Telecom Development Plan and initiatives in areas affected
by left wing extremism. Today, as the country ramps up the deployment of 5G technology, it
has become crucial to enhance internet outreach to rural areas to enable ubiquitous
availability of 5G networks.
Therefore, it has become very important to create digital linkages at the grassroots
level. As per the Ministry of Communications, out of 644,131 villages ( as per the
Registrar General of India (RGI) as of November 2019 ) in the country, around 598,951 (93
%) villages project, which is expected to be completed by December 2023.Further,6,279
villages that have 2G/3G connectivity will be upgraded to 4G under the project.
Overall, aided by these government driven initiatives, private telcos, Internet Service
Providers (ISPs) as well as other stakeholders are betting big on the transformation of
rural India to ensure ubiquitous access to next-generation technologies across the
country. The recent investment announced by the government, is in line with its aim to
build a robust digital infrastructure in rural areas take into account the different
demographic composition of these regions. Efforts to enhance digital access in rural areas
should prioritise addressing regional and gender divides. Given the varying terrains and
characteristics of villages across different states, it is important to tailor initiatives
to the local context in order to promote digital participation, literacy and adoption.
These measures can help rural areas take advantage of the current 5G wave. Further, the
government believes that the country needs to develop its own distinguished digital models
focussed on solving socio-economic issues as opposed to the models that are popular in
other developed nations, which largely focus on the monetary benefits.
All these developmental projects present a great opportunity for offering the various
kinds of Optical Fibre Cable solutions to the end users and should propel the Company
towards furthering its growth rate.
However, there are threats in terms of Right of Way (RoW) permissions, as the
challenges in getting these approvals still persist in the industry. With new guidelines
in place with both Central and State governments, the industry is striving hard to ward
off these challenges to effectively build a robust Optical Fibre Cable Network in the
country despite these bottlenecks being faced during the execution of network installation
projects.
The Governments policy decisions always shapes up the telecom industry in general and
any new changes in the rules and guidelines will have a bearing in the industry. However,
with the robust system in place, the industry is able forge ahead with the drive to
sustain the growth trajectory.
RISKS AND CONCERNS
As in the case of any other industry segments, risks are always there and telecom
industry is also prone to various roadblocks from time to time ,in terms of
non-availability of cheaper finances, logistics issues, policy concerns, taxation perils,
availability of skilled workforce, foreign exchange fluctuations and high turn-over of
workforce. The concern about logistics related to bringing in the raw materials into the
manufacturing locations and reaching out to the customers with the finished products still
remain as a major bottleneck due to geopolitical disturbances in recent times coupled with
increased cost of logistics. However, your Company has systems and robust policies in
place which should fend-off these risks and concerns.
Technological
(a) No more traditional copper telecommunication cable requirements in the network are
required, as all the telecom operators are going for optical fibre cables.
(b) Cut-throat competition is the norm which is always prevailing in the cable industry
as some of the players offering highly advantageous price levels to the customers, thereby
bringing the margins under huge pressure.
(c) Players offering products with inferior technology, ultimately affecting the
network to standards which are not at par with international ones.
Financial
Financial risks would include, interalia, low capacity utilization, un-remunerative
prices, highly concentrated customers base, fluctuation, commodity price including adverse
movements in prices of raw-materials, warranty and security, current or future
litigations, working capital financial condition of Companys customers declines. The
Company regularly identifies and monitors the financial risks as well as potential
business threats and develops appropriate risk mitigation plans. The Companys crisis
management capability is also reasonably honed to protect its reputation with its
stakeholders.
INTERNAL CONTROL SYSTEMS
The Companys system of and compliance control and risk management is embedded in the
business process by which the Company pursues its objectives. The established system also
provides a reasonable assurance on the efficiencies of operations, safety of assets
besides orderly and legitimate conduct of Companys business in the circumstances which
may reasonably before seen. The Company has a defined organization structure; authority
levels, delegated powers, internal procedures, rules and guidelines for conducting
business transactions.
The Company has already engaged two firms of Chartered Accountants for internal
auditing, who besides conducting periodic audits, independently reviews and strengthens
the control measures. The Internal Auditors regularly brief the Management and the Audit
Committee on their findings and al soon the steps to be taken with regard to deviations,
if any.
ENVIRONMENT & SAFETY
The Company successfully continued with the implementation of occupational health and
safety, quality and environmental protection measures and these are ongoing processes at
the Companys plant and facilities. Various proactive measures have also been adopted and
implemented which, interalia, include adoption of cleaner technologies wherever feasible,
conservation of resources through waste reduction and training of employees with a focus
on sustainable development by improving standards on occupational health & safety and
environment protection. As a recognition of these objectives, the entire range of products
of the Company continue to remain certified to the requirement of international standard
ISO14001:2015 (Environmental Management System)andISO45001:2018(Occupational Health and
Safety Management System) by the DNV GL Business Assurance India Pvt Ltd.
INDUSTRIAL RELATIONS & HUMAN RESOURCE DEVELOPMENT AND CORPORATE SOCIAL
RESPONSIBILITIES
The Company sees its relationship with its employees as critical to the future and
believes that every employee needs to possess apart from competence, capacity and
capabilities, sustainable values, current and contemporary which would make them useful,
relevant and competitive in managing the change constructively for overall growth of the
organization. To this end, the Companys approach and efforts are directed towards
creating a congenial work atmosphere for individual growth, creativity and greater
dedicated participation in organizational development. In-house and external training and
instructions are also provided to employees at all levels, which help in attaining
professional and productive culture by a blend of technology and highly skilled manpower.
The Company is committed to maintain good industrial relations through active
participation of workers, regular meetings and discussions on all legitimate and legally
tenable issues. The Company employed 285 number of permanent employees on its Roll as on
March 31, 2023.
CAUTIONARY STATEMENT
Statements in the Managements Discussion & Analysis Report which seek to describe
the Companys objectives, projections, estimates, expectations and predictions may be
considered to be "forward-looking statements" as of the date of this report and
are stated as required by applicable laws and regulations. Actual performance and results
could differ materially from those expressed circumstances. Market data and product
analysis contained in this Report has been obtained from internal Company reports and
industry publications, but their accuracy and completeness are not guaranteed and their
reliability cannot be assured.
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