I. An Overview:
The Managements Discussion and Analysis ("MD&A") summarizes the
financials and relays managements insights into the companys performance. This
Management Discussion and Analysis Report of Creative Castings Limited, for the year ended
on March 31, 2023 contains financial highlights but does not contain the complete
financial statements of the
Company. This should be read in conjunction with the Companys audited financial
statements, the schedules and notes thereto and the other information included elsewhere
in the Annual Report. Statements in the Management Discussion and
Analysis Report describing the Companys objectives, projections, estimates and
expectations may be forward looking statements within the meaning of applicable securities
laws and regulations. Actual results might differ materially from those expressed or
implied. MD&A is headed towards providing a narrative explanation of a companys
financial statements that enables investors to see the company through the eyes of
management and to enhance financial disclosure.
II. About the Company:
Creative Castings Limited was established in the year 1980 which is the Indias most
trusted & quality investment casting manufacturer & exporter by lost wax process
with an installed capacity of 840 MT/annum. The Company is committed to supply precision
parts with guaranteed material & casting quality. We have the state-of-the-art
facilities & expertise to back our commitment. The office & plant spread over 8924
Sq. Mts. area with a production area of around 3500 Sq. Mts. & is equipped with latest
technology production, testing & measurement facilities & with a full standby
captive power generation for uninterrupted production.
The Company is engaged in supply over 5,593 different types of castings in as cast
& in fully machined conditions to almost every field of engineering applications such
as pumps & valves, defense, oil & refinery, fire control equipment, automobiles
etc.
An experience of more than three decades in design & manufacture of complicated
parts weighing from few grams to 120 kg. the Company can handle large volumes 100000
pieces /month ability to handle over more than 250 different alloys to customized
specification.
Company has strong business relationship since more than 30 years with its 50% world
largest customers.
| III. Financial Performance: |
|
|
| Particulars |
2022-2023 (Rs. In Lakhs) |
2021-2022 (Rs. in Lakhs) |
| Total Income |
r |
4,272.96 |
| Total Expenses |
4,630.06 |
3,851.09 |
| Profit before tax |
647.42 |
421.87 |
| Tax Expenses |
168.63 |
93.78 |
| Profit After Tax |
478.79 |
328.10 |
Throughout the fiscal year, the Company achieved a significant milestone by attaining a
Revenue from Operations of Rs. 52.77 crore, a notable increase from the Rs. 42.72 crore
achieved in the preceding year. Additionally, the export of goods experienced a remarkable
surge of nearly 10 percent in comparison to the previous year, reaching Rs. 26.81 crore.
This export achievement stands as a remarkable accomplishment, constituting more than half
of the Companys total turnover.
Moreover, the Profit after Tax demonstrated substantial growth, reaching Rs. 4.79
crore, which signifies a remarkable uptick of 45.93 percent compared to the previous
years figure of Rs. 3.28 crore. This remarkable growth highlights the Companys prowess
in financial management and performance enhancement.
As we progress, our company remains dedicated to continuous improvement in performance
and the implementation of effective and efficient management strategies to propel us
toward our financial objectives.
Your Company has prepared its financial statements in accordance with Indian Accounting
Standards ("Ind AS") as per the
Companies (Indian Accounting Standard) Rules, 2015 as amended and notified under
section 133 of the companies act 2013 (the
"Act") and other relevant provisions of the Act. These financial statements
have been prepared and presented on the accrual basis of accounting under historical cost
convention or fair values as per the requirement of Ind AS prescribed under section 133 of
the Act. The financial statements prepared as per the applicable Accounting Standards and
there is no any material departure or deviation in giving treatment to any transactions
hence management discussion thereon is unsolicited.
IV. History:
The company was incorporated as "Creative Castings Private Limited" on
November 22, 1985. After Incorporation, the said company took over the running business of
the erstwhile Partnership firm, M/s. Creative Castings with effect from
March 21, 1986 on dissolution of the Partnership firm. All the assets and liabilities
were transferred to Creative Castings Private Limited. The business set up by the firm in
1980 was carried by the company and all the erstwhile partners of the firm were appointed
as the directors on the board of the company. The Company became a Public Limited Company
on October 06, 1994.
V. Product Line:
Creative Castings Ltd. is a manufacturer & exporter of machined as well as
unmachined investment castings to all key user industries like Pumps & Valve
Industries, Oil & Refineries, General Engineering, Electrical engineering, Fire
control equipments, Medical implants, Agricultural Machineries, Defense Industries etc.
The company has two furnaces with capacities of 300 kg each per heat. The companys
product has wide range of application in different industries viz. Industrial Pumps,
Electrical Engg., Valve Industries, Anti Fire Equipment, Defense Industries,
Instrumentations, Medical Implants, General Engineering, Oi1 and Gas Industries, Power
Industries etc. The Company has developed over 5,593 various types of castings till date.
Moreover, the castings produced by the company find applications in automobiles,
chemical processing, food processing, pharmaceutical, fertilizer industry and engineering
products.
The Company manufactures both ferrous and non-ferrous castings. Ferrous castings
comprise of stainless steel castings of various grades and carbon steel, which accounts
for around 75% of the production. Non-ferrous castings consist of Cobalt base alloy and
Nickel base alloy castings, which accounts for around 25% of the production.
VI. Segment wise or product-wise performance:
Segment-wise detailed performance is provided in the Note no. 22 and 38 to the
financial statement.
VII. Global and Indian Economy: a Overview and Outlook
Global Economy:
In Calendar Year (CY) 2022, the global economy encountered a deceleration, with a
growth rate of 3.4%, down from 6.2% in CY 2021, according to the International Monetary
Fund (World Economic Outlook Apr 2023). The year was marked by geopolitical uncertainties
due to prolonged conflicts and economic challenges, resulting in disruptions in the global
supply chain and elevated inflation driven by rising commodity and energy prices. The
imposition of sanctions on Russia, a significant energy supplier, dampened growth and
strained the supply chain. The ongoing Russia-Ukraine conflict, coupled with central banks
raising rates to curb inflation, continues to impact global economic activities.
Analysts anticipate the continuation of these issues in CY 2023, leading to further
economic slowdown and a mild recession in Europe. Prospects for global recovery are
projected in the latter half of 2023, accompanied by inflation moderation. However, risks
persist, such as stress in the banking systems of the US and Europe, potentially worsened
by sustained high inflation, triggering additional rounds of rate hikes that could
adversely affect the business environment. The unresolved Russia-Ukraine conflict also
contributes to ongoing uncertainty in global economic conditions.
Indian Economy:
In the midst of global volatility, the Indian economy achieved a growth rate of 6.8% in
CY 2022, propelling it to the rank of the worlds fifth-largest economy in nominal GDP
terms. Growth was supported by the service sector, while the manufacturing sector faced
challenges due to elevated input costs and uneven demand recovery. Increased government
expenditure in the infrastructure sector facilitated investment growth. However, monetary
tightening by the Reserve Bank of India (RBI), a widening current account deficit, and a
decline in export growth capped overall economic expansion.
According to the International Monetary Fund, the Indian economy is poised to exhibit
robust growth of 5.9% in CY 2023, leading among emerging economies. This growth is driven
by robust domestic demand, buoyant consumption growth due to improved labor market
conditions, growing consumer confidence, anticipated rural demand recovery, and increased
purchasing power coupled with moderating inflation. The Union Budget for Financial Year
(FY) 2023-24 unveiled a 33% increase in capex allocation to INR 10 Lakh Crores, expected
to bolster private investments. The Budget targets a lower fiscal deficit in FY 2023-24 at
5.9%, with the governments commitment to reduce it to below 4.5% by FY 2025-26. Risks to
this outlook include global economic weaknesses impacting exports, volatility in food and
crude oil prices, a slowdown in private consumption, and aggressive monetary tightening by
global central banks to curb inflation.
VIII. Industrys structure and outlook:
Global Scenario:
In 2022, the Investment Casting market in the U.S. is valued at approximately US$4.6
billion. China, renowned as the worlds second-largest economy, is poised to achieve a
projected market scale of US$6.1 billion by 2030, propelled by an impressive Compound
Annual Growth Rate (CAGR) of 8.4% during the analytical span spanning from 2022 to 2030.
Noteworthy geographic markets include Japan and Canada, both forecast to achieve growth
rates of 3.2% and 4.2%, respectively, over the 2022-2030 period. Germany, within Europe,
is anticipated to demonstrate a CAGR of around 3.9%.
The global economy stands at a pivotal juncture, facing an array of interconnected
challenges and crises. The unfolding dynamics of Russias conflict with Ukraine introduce
an element of uncertainty, potentially contributing to global instability. This
uncertainty, coupled with ongoing inflation concerns, signifies that the inflation
predicament is far from resolved. Persistent food and fuel inflation looms as an enduring
economic challenge, with implications for consumer confidence and spending. Governments
grappling with inflation may raise interest rates, leading to a slowdown in new job
creation and impacting overall economic activity and growth. Companies, concerned by
inflation and weakened demand, could curtail capital expenditure, suggesting a reduction
in investment enthusiasm. Developed markets appear poised for a possible recession, marked
by sluggish growth and elevated inflation. The specter of new COVID-19 outbreaks, coupled
with Chinas uncertain post-pandemic trajectory, poses genuine threats to global supply
chains and manufacturing continuity this year. The confluence of volatile financial
markets, escalating trade tensions, a more stringent regulatory landscape, and the
imperative to incorporate climate change into economic decision-making further exacerbates
the complexity of challenges faced. As the year 2023 dawns, the outlook appears
challenging for most markets, investors, and consumers. Nevertheless, amid these trials,
opportunities persist for resilient and adaptable businesses and their visionary leaders
who can navigate a course forward.
APAC is set to be the primary driver of the markets expansion, accounting for 35% of
its growth over the forecast period. Within APAC, India holds a pivotal role as a key
market for the investment casting industry. Notably, market growth in this region is
expected to outpace that of North America and South America.
Domestic Scenario:
According to Mordor Intelligence, the investment casting market, valued at USD 14.09
billion in 2021, is projected to ascend to USD 17.57 billion by 2027. Anticipated to
exhibit a Compound Annual Growth Rate (CAGR) of 4.58 percent during 2022 to 2027, this
markets expansion is being notably steered by the flourishing process, automotive, and
aviation sectors. Moreover, the surge in environmental consciousness and the strong focus
on sustainable development are also serving as catalysts for its growth. Nevertheless, the
absence of cost-effective technological solutions within the industry has led Indian firms
to heavily rely on skilled labor. The interplay of uncertain demand across various
industries could potentially yield fluctuations in production trends.
In the transformed landscape following the COVID-19 pandemic, the global Investment
Casting market, which was estimated at US$17.5 billion in 2022, is anticipated to expand
its dimensions to US$26.5 billion by 2030. This growth trajectory reflects a compounded
annual growth rate (CAGR) of 5.3% over the analytical span spanning from 2022 to 2030.
Within this panorama, the Sodium Silicate Process stands out as a key segment. It is
forecasted to exhibit a CAGR of 5.7%, culminating in a valuation of US$21.5 billion by the
conclusion of the analytical timeline. As the world grapples with ongoing post-pandemic
recovery, the growth outlook for the Tetraethyl Orthosilicate / Silica Sol Process segment
has been recalibrated to a revised CAGR of 3.7% for the subsequent 8-year period.
The investment casting sector in India is undergoing consistent expansion, driven by
heightened requisites for precision components across diverse domains like aerospace,
automotive, healthcare, and beyond.
In summation, the performance of the investment casting industry in the fiscal year
2022-23 was intricately shaped by a multifaceted interplay of variables encompassing
pandemic recuperation, sector-specific requisites, supply chain intricacies, and
governmental endeavors. The overall perspective leaned towards cautious optimism, with
indications of recovery and progress evident as various industries recommenced operations
and global economies gathered impetus.
IX. Opportunities & Threats:
Opportunities:
The investment casting industry is poised for several opportunities in the fiscal year
2023-24 and beyond, driven by technological advancements, changing consumer preferences,
and industry-specific demands. Here are some key opportunities for the investment casting
sector:
Aerospace and Defense Growth: The aerospace and defense sectors continue to expand
globally, presenting substantial opportunities for investment casting manufacturers. As
countries invest in modernizing their defense equipment and commercial aviation rebounds,
there will be an increased demand for complex and precision-engineered cast components.
Renewable Energy Transition: The global shift towards renewable energy sources,
such as wind and solar power, will create opportunities for investment casting companies.
Components used in wind turbines, solar energy systems, and energy storage solutions
require intricate designs and precision manufacturing.
Automotive Innovations: The automotive industry is experiencing a transformation
towards electric and hybrid vehicles. Investment casting can play a crucial role in
producing lightweight and complex components for these vehicles, contributing to improved
efficiency and performance.
Medical Equipment Manufacturing: The demand for medical devices and equipment is on
the rise, driven by an aging population and advancements in healthcare technology.
Investment casting can provide solutions for manufacturing intricate and sterilizable
components used in medical devices.
Customization and Innovation: With the advent of additive manufacturing (3D
printing) and advanced simulations, investment casting can offer customized and highly
intricate components that were not feasible before. This opens up new avenues in
industries like aerospace, automotive, and medical equipment.
Defence Indigenization: In countries with growing defense industries, such as
India, there are opportunities for investment casting manufacturers to support indigenous
production of defense equipment and reduce dependency on imports.
Infrastructure Development: Infrastructure projects like construction, railways,
and transportation systems require durable and intricate components that investment
casting can provide. As economies invest in these areas, demand for such components will
increase.
Global Supply Chain Reconfiguration: The disruptions caused by the COVID-19
pandemic have prompted industries to reconfigure their supply chains. Investment casting
companies that can offer reliable and efficient supply chain solutions may gain a
competitive edge.
Sustainable Practices: Increasing emphasis on sustainability and environmental
responsibility provides opportunities for investment casting companies to explore
eco-friendly materials and processes, catering to environmentally-conscious customers.
Automation and Digitalization: Investment casting manufacturers can embrace
automation, robotics, and digital technologies to enhance efficiency, reduce lead times,
and improve quality.
Aftermarket and Maintenance: As industries like aviation and automotive grow, there
will be an increased demand for spare parts, maintenance, and repair services. Investment
casting can play a role in supplying these replacement components.
In conclusion, the investment casting industrys opportunities in fiscal year 2023-24
and beyond are diverse and promising, with the potential to contribute significantly to
various sectors through technological innovation, customization, and meeting evolving
industry demands.
Threats:
While there are opportunities for the investment casting industry, there are also
potential threats that could impact its growth and sustainability in the fiscal year
2023-24 and beyond. These threats include:
Supply Chain Disruptions: The investment casting industry heavily relies on a
global supply chain for raw materials, equipment, and technology. Any disruptions in the
supply chain, whether due to geopolitical tensions, natural disasters, or global crises,
can lead to delays and shortages, affecting production and delivery timelines.
Fluctuating Raw Material Costs: Volatile prices of raw materials like metals and
alloys can impact production costs and profit margins. Sudden spikes in material costs
could lead to difficulties in maintaining competitive pricing.
Competition from Alternatives: Advances in additive manufacturing (3D printing) and
other advanced manufacturing techniques pose a threat as they can provide alternatives to
investment casting for certain applications. These technologies may offer quicker
production, reduced material waste, and customization options.
Environmental Regulations: Stricter environmental regulations and sustainability
expectations could impact the investment casting industrys practices, particularly if it
relies heavily on energy-intensive processes or materials that have a significant
environmental footprint.
In addition to above, the below factors can impact on growth i.e.
Changing Market Demand
Geopolitical Uncertainties
Economic Downturns
| Skilled manpower shortages |
| Quality Assurance Challenges |
| Technological Obsolescence |
| Regulatory Policy Changes |
Further, the energy-intensive nature of industries is one of the factors impeding the
investment casting market growth. Energy requirements for manufacturing investment
castings are expected to increase with the growth of the global investment casting market
in the coming years. Most of the industrys energy requirements are for melting metals.
However, mold-making and core-making also require considerable amounts of energy. Such
factors might limit the growth of the market during the forecast period.
In conclusion, the investment casting industry faces various threats that can impact
its operations, growth, and overall competitiveness in the fiscal year 2023-24 and beyond.
Companies need to proactively address these threats through strategic planning,
innovation, diversification, and risk management strategies.
X. Risks and areas of concern:
In any business, risks and return are inseparable. As a responsible management, the
Companys principle is to maximize returns and minimize risk.
The Board of the Company is responsible for identifying, assessing, and mitigating
risks that may impact the operations, objectives, and stakeholders of the Company. Apart
from the risks identified and reported in notes to the financial statement; the broader
risks, its impact on the Company and its mitigation measures are listed below:
| Key Risk |
Impact on the Company |
Mitigation |
| Volatile global political and economic scenario and war situation between Russia and
Ukraine. |
Factors of a geopolitical nature, encompassing trade conflicts, shifts in governmental
strategies, and economic unpredictability, possess the potential to influence tariffs,
trade hindrances, worldwide supply networks, the valuations of raw materials, energy
expenditures, and the export potential of the company. |
Consistent vigilance over market dynamics, remaining attuned to industry shifts, and
employing preemptive approaches to detect risks at their inception are imperative. The
company can effectively employ price hedging strategies within long-term supplier
agreements. Enhancing operational efficiency and minimizing wastage offer avenues to
counterbalance the effects of elevated raw material expenses, facilitating the transfer of
supplementary costs to customers while upholding profit margins. |
| Environmental, Social and Governance (ESG) and sustainability concerns |
The growing recognition of Environmental, Social, and Governance (ESG) imperatives and
sustainability considerations has the potential to impose an augmented compliance load on
the broader manufacturing sector. This could result in more stringent emissions standards,
heightened waste management mandates, and escalated demands for enhanced energy
efficiency. |
Determine and evaluate ESG risks that pertain directly to the companys operations and
its supply chain. This evaluation should encompass ecological risks (such as resource
limitations, climate shifts, and pollution), societal risks (including labor protocols,
human rights, and community influence), as well as governance risks (such as adherence to
regulations, ethical practices, and transparency). Subsequently, rank these risks and
establish a precedence for actions aimed at their resolution. |
Quality Control:
The Company underscores its accomplishments in upholding rigorous quality benchmarks.
This accomplishment has been realized through our endeavors to harmonize resources and
technology, resulting in the creation of products that mirror global excellence standards.
Our commitment to quality commences from the inception of the production process,
guaranteeing the delivery of products of exceptional caliber.
XI. Human resources/ industrial relations front:
Human resource is considered as key to the future growth strategy of the Company and
looks upon to focus its efforts to further align human resource policies, processes and
initiatives to meet its business needs. In order to focus on keeping employees abreast of
technological and technical developments, the Company provides opportunity for training
and learning. Industrial relations are cordial.
The Company is working on enhancing its competencies to take care of current and future
business. Its employee strength as on March 31, 2023 was 134 (P.Y. it was 137). Human
Resource and Industrial Relations departments have developed systems and policies on
recruitment, performance management, learning and development, and employee engagement.
The high level of motivation of the employees and their identification with the company
is the basis for the creation of a strong team who continuously advance the innovative
brands and superior technologies with their inventive talent and pioneering spirit. The
training courses are evolved to internalize the principles of sustainable development and
to uphold the Companys corporate culture based on fairness and team spirit.
Internal control systems and adequacy:
Internal controls are designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with IFRS. Absolute assurance cannot be provided that all
misstatements have been detected because of inherent limitations in all control systems.
The Companys internal control policies are in line with its size and nature of
operations and they provide assurance that all assets are safeguarded, transactions are
authorised, recorded and reported properly following all applicable statutes, General
Accepted Accounting Principles, companys Code of Conduct and corporate policies. The
Company has an Audit
Committee, which conducts audit in various functional areas as per audit plan approved
by the Audit Committee. The audit committee has a good understanding of the organizations
framework and related components of internal control. The Company has appointed an
Internal Auditor who, from time to time, draw attention of chairman of Audit Committee of
the Company about the gray area needs improvements. Audit planning and executions are
oriented towards assessing the state of internal controls, making them stronger and
addressing the risks in the functional areas of the Company and suggests improvements for
strengthening them. Similarly, the Internal Auditors are also responsible for monitoring
the Internal Control Systems.
XII. Key Financial Ratios:
In accordance with the SEBI (Listing Obligations and Disclosure Requirements)
(Amendment) Regulations, 2018, the Company is required to give details of significant
changes (change of 25% or more as compared to the immediately previous financial year) in
key-specific financial ratios. Your Company has identified the following ratios as key
financial ratios:-
| Particulars |
2023 |
2022 |
Change |
Explanation for change in ratio by more than 25% as compared to previous year |
| Debtors Turnover |
4.45 |
5.68 |
-21.65% |
|
| Inventory Turnover |
6.71 |
6.50 |
3.13% |
|
| Interest Coverage Ratio |
N.A. |
N.A. |
N.A. |
|
| Current Ratio |
5.12 |
6.34 |
19.24% |
|
| Debt Equity Ratio |
N.A. |
N.A. |
N.A. |
|
| Operating Profit Margin (%) |
12.75 |
10.13 |
25.86% |
During the financial year 2022-23, Net profit is increased therefore ratio is
increased. |
| Net Profit Margin (%) |
9.43 |
7.87 |
19.82% |
|
| Return on Net Worth ( % ) |
13.76 |
10.56 |
30.30% |
During the financial year 2022-23, Net profit is increased therefore ratio is
increased. |
| For and on behalf of Board |
| Sd/- |
| Dhirubhai H. Dand |
| Chairman |
| DIN: 00284065 |
| Dolatpara, August 12, 2023 |
+91-9892691696
