cybele industries ltd share price Management discussions

Overview:

The following operating and financial review is intended to convey the Management’s perspective on the financial and operating performance of the Company at the end of the Financial Year 2022-23. This Report should be read in conjunction with the Company’s financial statements, the schedules and notes thereto and other information included elsewhere in the Annual Report. The Company’s financial statements have been prepared in accordance with the 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.

This report is an integral part of the Board’s Report. Aspects on industry structure and developments, outlook, risks, internal control systems and their adequacy, material developments in human resources and industrial relations have been covered in the Board’s Report and is incorporated herein by reference and forms an integral part of this report. Your attention is also drawn to sections on Strategy, Risk and Opportunities forming part of the Annual Report. This section gives significant details on the performance of the Company.

Global Economic Overview

The global economy showed exceptional resilience, as evidenced by robust labour markets, substantial household consumption and business investments. The year 2022 brought along some tough winds, impacting the global economy’s overall growth run. But despite all the challenges, it could not derail the economy from its growth trajectory and even showed optimism in the latter half of the year. According to the International Monetary Fund’s World Economic Outlook, published in April 2023, the global economy grew by 3.4% in 2022. Governments across the globe, responding to the challenges encountered by the world economy, implemented tighter monetary policies and structural reforms. They increased government spending to stimulate economic activities and improve the economy’s outlook. Thus, helping create a more stable and prosperous global economic environment.

After the Covid-19 pandemic, the world economy saw a rapid recovery in economic activity, which was soon over shadowed by rising inflationary pressures that persisted through the first half of 2022. According to IMF World Economic Outlook, April 2023, the estimated real GDP growth figures for the advanced economy are 2.7% in 2022 and 1.3% in 2023. The estimated figures for emerging economies are anticipated to be 4.0% for 2022 and 3.9% for 2023. But with stricter monetary and financial policies on board, the global economy has gradually started to witness subdued inflationary risks from 2022 onwards. According to IMF, global inflation is estimated to decline from 8.7% in 2022 to 7.0% in 2023, and to 4.9% by 2024. This forecast indicates the positive impact of the policies implemented to counter the rising inflationary pressures and reflects the overall stability of the global economy.

Overlook

The year 2022 saw price volatility and inflation as the prime cause of concern globally for the economy and policy makers alike. Looking ahead into 2023, we anticipate the economic outlook to maintain a moderate stance, much like 2022, with an estimation of 2.8% growth. In this challenging external environment, contractionary monetary policies will likely continue to be implemented, while fiscal policies are expected to alleviate cost-of-living pressures, in line with the adhered monetary policies.

INDIAN ECONOMY OVERVIEW:

Indian economy has distinguished itself as the fastest-growing entity among major economies. In the first half of 2022-23, the country achieved a robust growth of 9.7% according to the Monthly Economic Review, November 2022 by the Department of Economic Affairs. A sharp rebound of economic activities, especially the private sector consumption and increased Government thrust on uplifting infrastructure, helped India sustain to steady growth momentum.

In the first quarter of 2022-23, persistent inflationary pressure compelled the Reserve Bank of India (RBI) to recalibrate its monetary policies. As a result, the Indian economy has started to experience the easing of the inflationary grip while the inflation stood moderate during the third quarter. This transformation in the economy is aiding the demand scenario in the domestic market and enabling the country’s economic wheel to roll in a geared momentum. The adoption of calibrated monetary policies aimed at controlling inflation, coupled with steady growth in service activity, boosted demand and increased consumption. Due to the higher inflationary pressure on food prices, retail inflation saw a three-month high in January 2023. Previously retail inflation was led by a 12-month low in December 2022 at 5.72%, which went beyond the 6% tolerance band in January 2023.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company is engaged in the business of manufacture and sale of Building Cables, Flexible Cables, Power Cables, Submersible Pump Cables, Automotive Cables, Control Cables, Railway Signaling Cables and Harness Cables which are classified under the Industrial Structure as Electrical Cables and Wires. The company also engaged in property development.

OPPORTUNITIES AND THREATS

The product portfolio of the Company is dominated by threats posed by manufacturers in un-organised sector. As the Government is initiating various measures to encourage the infrastructure and housing sector, there is possibility of increase in demand for cables and wires and also improvement in the real estate sector.

RISK AND CONCERNS

The fortune of the Company is dependent on entry barriers set up by electrical cables and wires business in the unorganized sector. Further as a manufacturer in the organized sector, the fixed costs in terms of administrative expenses are high.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate internal control system monitored by Internal Auditors who are reporting to the Audit Committee. The Audit Committee is meeting periodically for reviewing the performance of the Company and formulating policies / issuing guide lines to the Management.

FINANCIAL PERFORMANCE

The Company made a profit before tax of Rs.42.93 lakhs during the year. The Company is taking necessary steps to improve the performance of the company.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company regularly deputes employees to seminars and various programmes to help them to enrich their professional skills and knowledge. The company has formulated incentive schemes to employees to increase the productivity and performance. The company maintains cordial relationship with workers and employees at all levels.

REPORTING OF FRAUD

The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.

SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standards as amended from time to time.

DISCLOSURE OF ACCOUNTING TREATMENT:

Pursuant to the notification, issued by the Ministry of Corporate Affairs dated February16,2015 relating to the Companies (Indian Accounting Standards) Rules, 2015, the Company has adopted "IND AS" with effect from 1^st April 2016. Accordingly, the financial statements for the year 2022-23 have been prepared incompliance with the said Rules.

ACKNOWLEDGEMENT

The Directors would like to place on record their sincere appreciation to its customers, vendors, dealers, suppliers, investors, business associates, bankers, Government Authorities for their continued support during the year. The Directors truly appreciates the contribution made by employees at all levels for their hard work, solidarity, co-operation and support.

		(By order of the Board)
		for CYBELE INDUSTRIES LTD.,
Place : Chennai	Thomas P Joy
Date	: 26.05.2023	Managing Director