DCG Cables & Wires Ltd Management Discussions

"Annexure F"

MANAGEMENT DISCUSSION AND ANALYSIS REPORT ECONOMIC OVERVIEW:

Global Economy

Global manufacturing growth picked up in the third quarter, but remained moderate. Despite this recent positive performance, global manufacturing production faces mounting challenges: high inflation and an energy price shock, persistent disruptions in the supply of raw materials and intermediate goods, global economic deceleration, weakened confidence and high uncertainty. This could build into headwinds slowing down this sector in many economies, particularly in Europe.

In the third quarter of 2022, world manufacturing production stabilized at a solid 3.6 per cent year-over-year growth rate, following a weaker 3.0 per cent increase in the previous quarter.

After the collapse of manufacturing in 2020 caused by the COVID-19 pandemic and the subsequent recovery in 2021, world manufacturing production in 2022 is growing at a modest pace, yet on an unstable ground.

The manufacturing sector in Latin America and the Caribbean recorded an expansion of 4.9 percent, which can be mainly attributed to the good performance of Mexico and Argentina, reporting 7.2 per cent and 5.8 per cent growth, respectively. Manufacturing production in Asia and Oceania achieved an output growth of 4.4 per cent. This result is primarily linked to the manufacturing activity in China, where production expanded by 4.5 per cent, climbing from a relatively weak 2.7 per cent growth recorded in the previous quarter. This has been supported by fewer restrictive containment measures in this country and a consequent rebound in activity. In Japan, the performance of manufacturing sector improved in the third quarter and grew by nearly 4.0 per cent, following declines reported in the first two quarters of 2022. Significant growth was observed in Saudi Arabia, where manufacturing production rose by 25.3 per cent in the third quarter, and continued the pattern of strong growth observed in the previous quarters of 2022. A new industrial strategy of the country aims at turning this country into a prominent industrial producer at a global scale. A closer look at different regions provides further insights.

Northern Americas manufacturing output continued growing at a moderating pace of 3.5 per cent, mirroring a slight, but notable deceleration in the manufacturing production of the United States of America (3.4 per cent growth). At the same time, European manufacturing production grew by 1.7 per cent, suffering from the proximity to the conflict in Ukraine. The United Kingdoms manufacturing output has declined for several quarters in a row. The latest data reveals a deepened fall by 5.7 per cent, one of the steepest downturns since the global financial crisis. On the other hand, some leading European manufacturers remained in positive territory: Germany reported growth of 2.0 percent, France 2.7 per cent, Spain 3.0 per cent, and Switzerland 6.5 per cent. However, this expansion might still be at risk considering the outlook for the approaching winter: persistent supply chain disruptions, record-high energy prices and the possibility of localized blackouts.

Indian Economy Outlook and Outlook for Industry

Manufacturing is emerging as an integral pillar in the countrys economic growth, thanks to the performance of key sectors like automotive, engineering, chemicals, pharmaceuticals, and consumer durables. The Indian manufacturing industry generated 16-17% of Indias GDP pre-pandemic and is projected to be one of the fastest growing sectors.

The machine tool industry was literally the nuts and bolts of the manufacturing industry in India. Today, technology has stimulated innovation with digital transformation a key aspect in gaining an edge in this highly competitive market.

Technology has today encouraged creativity, with digital transformation being a critical element in gaining an advantage in this increasingly competitive industry. The Indian manufacturing sector is steadily moving toward more automated and process-driven manufacturing, which is projected to improve efficiency and enhance productivity.

India has the capacity to export goods worth US$ 1 trillion by 2030 and is on the road to becoming a major global manufacturing hub. With 17% of the nations GDP and over 27.3 million workers, the manufacturing sector plays a significant role in the Indian economy. Through the implementation of different programmes and policies, the Indian government hopes to have 25% of the economys output come from manufacturing by 2025.

India now has the physical and digital infrastructure to raise the share of the manufacturing sector in the economy and make a realistic bid to be an important player in global supply chains.

A globally competitive manufacturing sector is Indias greatest potential to drive economic growth and job creation this decade. Due to factors like power growth, long-term employment prospects, and skill routes for millions of people, India has a significant potential to engage in international markets. Several factors contribute to their potential. First off, these value chains are well positioned to benefit from Indias advantages in terms of raw materials, industrial expertise, and entrepreneurship.

India is gradually progressing on the road to Industry 4.0 through the Government of Indias initiatives like the National Manufacturing Policy which aims to increase the share of manufacturing in GDP to 25 percent by 2025 and the PLI scheme for manufacturing which was launched in 2022 to develop the core manufacturing sector at par with global manufacturing standards.

India is planning to offer incentives of up to Rs. 18,000 crore (US$ 2.2 billion) to spur local manufacturing in six new sectors including chemicals, shipping containers, and inputs for vaccines.

Manufacturing has emerged as one of the high growth sectors in India. Prime Minister of India, Mr Narendra Modi, launched the Make in India program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy. Government aimed to create 100 million new jobs in the sector by 2022.

Indian Copper Industry:

Hindustan Copper Limited (HCL), a Miniratna Category-I, Government of India (GoI) Enterprise under the administrative control of the Ministry of Mines, was incorporated on 9th November 1967 under the Companies Act, 1956. It was established as a Govt. of India Enterprise to take over all plants, projects, schemes and studies pertaining to the exploration and exploitation of copper deposits from National Mineral Development Corporation Ltd. It is the only company in India engaged in mining of copper ore and owns all the operating mining lease of Copper ore and also the only integrated producer of refined copper (vertically integrated company). Major activities of HCL include mining, ore beneficiation, smelting, refining and converting of refined copper metal into continuous cast rod (CCR) as downstream product. HCL has acquired assets of Jhagadia Copper Limited (JCL) from M/s ARCIL (Asset Reconstruction Company (India) Limited) in 2015-16 and renamed as GCP (Gujarat Copper Project). With this acquisition HCL now have five operation units -one each in the states of Rajasthan, Jharkhand, Madhya Pradesh, Gujarat and Maharashtra. HCL is a listed company on BSE and NSE, with 66.14 % equity owned by the Government of India.

India has very limited known reserves of copper ore exploitable for copper production. The total resources of copper ore in the country as on 1.4.2015 are estimated at 1511.50 million tonnes with about 12.16 million tonnes of copper metal. Of these 207.77 million tonnes (13.74%) fall under Reserve category containing 2.73 million tonnes of copper metal and the balance 1303.73 million tonnes (86.25%) are Remaining Resources containing 9.42 million tonnes of copper metal.

Rajasthan is credited with 813.33 million tonnes ore (53.81%) containing 4.48 million tonnes of copper metal, Jharkhand 295.39 million tonnes ore (19.54%), containing 3.28 million tonnes of copper metal, Madhya Pradesh 283.43 million tonnes ore (18.75%), containing 3.42 million tonnes copper, and the rest 7% are accounted for by other states namely Andhra Pradesh, Gujarat, Haryana, Karnataka, Maharashtra, Meghalaya, Nagaland, Odisha, Sikkim, Tamil Nadu, Telangana, Uttarakhand and West Bengal. Indias share of world reserve is around 0.31% only. According to United States Geological Survey (USGS), total global copper reserves amount to 880 million tonnes (Mt) of copper (The World Copper Factbook 2022). Globally, Chile has the largest reserves of copper followed by Australia, Peru, Russia, Mexico, USA, Indonesia, China are the other countries.

The mean undiscovered totals for porphyry and sediment-hosted deposits are 3,100 million tons and 400 million tons respectively, resulting in a global total of 3,500 million tons of copper. With identified copper resources currently estimated at 2,100 million tons, total copper resources (undiscovered + identified) are estimated at 5,600 million tons (Source: The World Copper Factbook 2022). HCL hold around two-fifths of the copper ore reserves in India. HCL as on 1.4.2022 has reserves (proved & probable) of 165.50 million tonnes ore (average grade 1.32%) and total reserve and resources of 631.85 million tonnes ore (average grade 0.99 %) spread over seven mining leases.

BUSINESS OPERATIONS AND OUR PRODUCTS:

The Company is a manufacturer of copper cables and wires. Our primarily focus is on manufacturing of different types of copper cables which finds application in Transformers. Our product portfolio consists of Copper Strips, Paper Covered Copper Strips and Wires (Kraft/Crepe/Nomex/Mica) Bare Copper Wires and Strips, Copper Tapes and Fiber Glass Copper.

At DCG, we take pride in offering a wide range of copper products. Our products include bare copper strips, conductors, and wires, ensuring optimal conductivity for various applications. We also provide paper-covered copper conductors in both rectangular and round shapes, as well as multi-paper-covered copper conductors and connection cables designed specifically for transformers. For added durability, we offer fiber glass- covered copper strips and wires. Additionally, our copper submersible wires and strips are perfect for submersible applications. We also supply twin and triple bunched paper-covered copper strips and bunch conductors.

We majorly supply our products to the transformer manufacturing companies in India and our main marketing strategy is to develop and maintain good relationships with our customers. Our promoter has been in this industry since 2008 and his relationships with the customers / clients have been very helpful for the growth of our business.

As on the date of this Prospectus, we have three manufacturing units -

1) Odhav, Ahmedabad

2) Kubadthal, Ahmedabad and

3) Waghodia, Vadodara,

Having a combined installed capacity of 5,868 MT for manufacturing bare Copper wire & Strips, 1,404 MT for Paper Covered Copper Strips & wire, 1,512 MT for Cable Wires, 5,760 MT for Copper Rods, 10,080 MT for Copper Flats, 972 MT for Submersible Wires and 540 MT for Fiber Glass Covered Copper Strips. Our manufacturing facilities are equipped with the latest required machineries that enable us to offer products as per the specific requirements of clients along with low production cost. As on the date of this Prospectus, our company has received accreditations such as ISO 9001: 2015 Certification for Quality Management System by Optimum Certifications Inc.

SWOT ANALYSIS:

Strength

• Exceptional Product Quality: Our cables and wires are known for their excellent conductivity, durability, and reliability, making them a preferred choice for industries where performance is critical. v Customization Expertise: Whether clients require cables of a specific length for structured cabling installations, varying lengths for intricate setups, or precise measurements for any other purpose, our Company can accommodate these demands with unparalleled precision. v Competitive Pricing: Our Company is able to provide competitive pricing to its clients due to strong supply chain set-up

• Reliability and Consistency: Providing the desired and good quality products consistently help us in enhancing our clients trust & reliability and maintaining long term relationships with them. v Promoters Experience: The strength of our promoters experience is a key asset that significantly contributes to our companys standing and prospects. Our promoters bring with them a wealth of knowledge acquired through years of experience in the cable and wires sector.

Weakness

• Companys product portfolio may lack diversification, potentially limiting its ability to address potential market demands fully.

• Dependency on Suppliers: Overreliance on specific suppliers for raw materials may expose our Company to supply chain vulnerabilities.

• Market Dependency: Our Company may have a heavy reliance on specific market segments, making it susceptible to economic fluctuations in those industries.

Opportunity

• Emerging Markets: Expansion into emerging markets can provide our Company with new growth opportunities, as these markets often have increasing infrastructure needs. v Digital Transformation: Leveraging digital technologies can enhance customer engagement, streamline operations, and improve supply chain management.

• Infrastructure Investment: Increased government investments in infrastructure projects, such as smart cities, transportation networks, and renewable energy installations, create substantial opportunities for supplying cables and wires. Our Company can position itself as a reliable partner for these projects.

Threats / Risks / Concerns

• Economic Uncertainty: Economic downturns and disruptions can impact demand for construction and infrastructure projects, affecting the companys sales.

• Supply Chain Disruptions: Global supply chain disruptions, like those seen during the COVID-19 pandemic, can disrupt the production and delivery of materials. s Intense Competition: The B2B cable and wires industry is highly competitive, with the presence of established players and new entrants.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has in place proper system of internal control which is commensurate with size and nature of business. The Company has an Audit Committee headed by the Independent Director, inter-alia, to oversee companys reporting process, disclosure of information.

FINANCIAL POSITION AND RESULTS OF OPERATIONS:

The Company has robust growth and improvement in top line and bottom line on Standalone basis in the Current and previous financial years which is explained below:

(Rs. in Lakhs)

PARTICULARS	STANDALONE - FINANCIAL STATEMENTS-YEAR ENDED MARCH 31, 2024	STANDALONE - FINANCIAL STATEMENTS-YEAR ENDED MARCH 31, 2023
Revenue from Operations	10,110.29	5,452.47
Other Income	7.32	2.71
Total Income	10117.61	5455.18
Expenses:
- Cost of Material Consumed	8618.24	5077.62
- Purchase of Stock-in T rade	-	-
- Other Operating & Manufacturing Cost	50.71	35.93
- Changes in Inventories	(377.01)	(147.43)
- Employee benefits Expenses	120.24	71.89
- Finance Costs	292.07	97.66
- Depreciation and Amortization Expenses	103.72	27.57
- Other Expenses	87.10	60.50
Total Expenses	8895.04	5223.75
Profit / (Loss) before exceptional and extraordinary Items and tax	1,222.57	231.43
Prior Period Items	3.51	-
Profit / (Loss) after Extra Ordinary Items and before tax	1,219.06	231.43
Tax Expense:	333.89	63.05
A) Current Income Tax	337.58	62.85
B) Deferred Tax (Assets)/Liabilities	(3.70)	0.20
Profit / (Loss) After Tax	885.17	168.38

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS:

The Company considers employees as its vital and most valuable assets. Your Company considers manpower as its assets and understands that people have been driving force for growth and expansion of the Company. As on March 31, 2024, there were 56 permanent employees employed by the Company. The Company will continue to create opportunity and ensure recruitment of diverse candidates without compromising on meritocracy.

KEY FINANCIAL RATIOS:

Sr. No.	Ratio	Numerator	Denominator	As at March 31, 2024	As at March 31, 2023	% Change	Reason for variance
1	Debtors Turnover (Trade Receivable Ratio) (In times)	Net credit Sales	Average Trade Receivable	3.24	5.76	-43.76%	In the Year FY 2024, the Trade receivable Ratio is reducing significantly since the company has improve it credit policy which reduces level of Trade Receivable outstanding at the end of the year.
2	Inventory Turnover ratio (In times)	Cost of Goods Sold	Average Inventory	7	9.52	-26.50%	In the FY 2024 the Inventory turnover ratio decreased as the company has achieved good turnover and control the Inventory level
3	Interest Coverage Ratio	Earnings Before Interest and Taxes	Interest Expense	5.19	3.37	53.90%	Company is overlooking opportunities to magnify their earnings through leverage.
4	Current ratio (In times)	Current Assets	Current Liabilities	1.33	1.76	-24.64%	Since there is increase in short term debt
5	Debt- Equity ratio (In times)	Total Debt	Shareholders Equity	2.36	1.22	93.11%	In FY 23-24, the company lent capital to finance its growth.
6	Return on Equity Ratio	Net Profit After Tax	Shareholders Equity	36.76%	10.99%	234.53%	Return on Equity Ratio is increased as the turnover and the profit of the company has increased substantially.
7	Net Profit Ratio	Net Profit After Tax	Turnover	8.76%	3.09%	183.51%	Net Profit Ratio is increased significantly because Revenue is increased & other fixed overheads are not increased in that proportion
8	Return on Capital employed (%)	Earnings Before Interest and Taxes	Capital Employed = Tangible Net worth + Debt + Lease Liability	31.98%	7.45%	329.45%	Return on Capital employed increased significantly because Revenue & Net Profit are increased.

CAUTIONARY STATEMENT:

The content in this Management Discussion and Analysis may contain "Forward Looking Statements" including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Companys future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, several risks, uncertainties, and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. The Company undertakes no obligation to publicly revise any forward- looking statements to reflect future/ likely events or circumstances.

Date: August 27, 2024	For and on behalf of Board of Directors DCG CABLES & WIRES LIMITED
Place: Ahmedabad
Registered office:	Sd/- Sd/-
12, Agrasen Industrial Estate,	Devang Patel Harshadbhai Patel
Chotalal ni Chali, Odhav Road,	Managing Director	Non-Executive Director
Ahmedabad - 382415,	(DIN:07628987)	(DIN:07628969)
Gujarat