Delton Cables Ltd Management Discussions.

INDUSTRY STRUCTURE, OUTLOOK & DEVELOPMENTS

Delton Cables Limited is one of the Indias leading manufactures for cables wires and switchgear products. The Company has been maintaining its position; quality in the manufacturing of Cables since last 70 years. This has been primarily due to maintaining highest standards of quality and service.

The wires and cables industry in India has seen many improvements in the past decade. It has grown from a small industry to a large one during this period. The Prospects of wire and cable industry are interlinked with the other industries such as telecommunication, automotive, railway, real estate and Infrastructure Sector etc. With investments across different infrastructure segments in the background of government initiatives, the demand for cables is expected to increase considerably. With the growth of other related industries, the Indian wire and cable industry is indeed bound to grow and prosper.

Due to COVID – 19 Pandemic and lockdown during the end of financial year, sales performance of the Company was affected as the operations of the Company (both plant and office) were closed down. In spite of the above situation, the Company recorded a net profit of Rs. 588.67 lacs. Further, the Company continuously monitors the situation and takes appropriate actions, as necessary to scale up the operation.

OPPORTUNITY & THREATS, RISK & CONCERNS

The Wire and Cables industry has been witnessing growth owing to the boost provided by the recent policy and regulatory initiatives as well as Government Schemes like Ujjwal Discom Assurance Yojana (UDAY), the Integrated Power Development Scheme (IPDS) etc. Further Indian Railways Mission 41K has generated the potential for Indian Wires and Cables industry through electrification of 38,000 km route.

Governments focus on Power for All, Rural Electrification, improving infrastructure, improved life-style has created new opportunities for wire and cables industry propelling the demand of domestic cables and wires and electrical items.

Your Company is fully aware of these challenges and is geared to meet them. COVID-19 pandemic without any doubt, has adversely affected the entire economy, all across the world. However, your Company has systems and robust policies in place which will help in facing such risks and concerns. Your Company also recognizes the risks associated with business and takes adequate measures to address the associated risks and concerns.

Your Company has a robust risk management framework that facilitates a clear understanding of strategies, policies, initiatives, norms and controls to identify and evaluate risks. The framework ensures that the risk management discipline is initiated centrally by the senior management and progressively decentralized, extending to managers across hierarchies, for effective risk mitigation at the micro level.

The management periodically reviews the risk and suggests steps to be taken to control and mitigate the same through a properly defined framework. In line with the new regulatory requirements, the Company has formally framed a Risk Management Policy to identify and assess the key risk areas, to monitor and report compliance and effectiveness of the policy and procedure.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Ratios 2019- 20 2018- 19 Variation (in %) Reason for change
Inventory Turnover Ratio (in days) 186 282 (34.07)% The decline in inventory turnover ratio is due increase in sales levels m a i n t a i n e d b y t h e Company
Interest Coverage Ratio (in %) 193% 18% 979.52% The increase in Interest coverage ratio is due to better profitability as well as significant reduction in finance cost in the financial year 2019-20
Operation Profit Ratio (in %) 5% (15%) 132.16% The increase in the operating profit ratio is d u e t o h i g h e r v o l u m e , i m p r o v e d m a r g i n a n d b e t t e r operational profitability in financial year 2019-20
Return on Net Worth (in %) 10% 102% (90.09)% Return on Net worth and Net Profit ratio is d e c r e a s e d d u e t o exceptional income on sale of land & buildings
Net Profit Ratio (%) 5% 70% (93.31)% i n p r e v i o u s y e a r. However the company achieved 20% growth in terms of operational profit.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has proper and adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to its operations, financial reporting and compliance with applicable laws and regulations.

The internal control systems are designed to ensure that the financial and other records are reliable for the preparation of financial statements and for maintaining assets. This is further strengthened by the Internal Audit done concurrently. Besides, this the Internal Auditors regularly brief the Management and the Audit Committee of the Company on their findings and on the steps to be taken with regard to deviations, if any. The Company also continues its efforts to align all its processes and controls with best practices.

ENIVRONMENT AND SAFETY

The Company successfully continued with the implementation of occupational health and safety, quality and environment protection measures and these are ongoing processes at the Companys plant and facilities. In view of the COVID -19 Pandemic, various protective measures have also been adopted which interalia includes adoption of cleaner/sanitizer technologies, wherever feasible and training of employees focusing on healthy and safer standard of living and improving standard on occupational health & safety and environment protection. As recognition of these objectives, the entire range of products of the Company continues to remain certified to the requirement of International Standard ISO 9001:2015, ISO 14001:2015 by SWISS CERT Pvt. Ltd and Health and Safety system has been certified to OHSAS 18001:2007.

HUMAN RESOURCES AND CORPORATE SOCIAL RESPONSIBILITY

The Company firmly believes that the human capital built up by it over the years is its most valuable asset and key resource of the Company. All efforts are made to empower them continuously through greater knowledge, team spirit and developing greater sense of responsibility. The Company has steadily built up human resources and trained them well to take on enlarged operations so as to take advantage of the opportunities thrown open by the market.

The Company is dedicated to do the welfare of its employees and committed to improve quality of the life of its employees by providing safe and clean working atmosphere.

The Company recognizes the importance of human resources in realising its growth ambitions and believes in nurturing talent within the organization to take up leadership positions. During the year Company continued to maintain healthy and cordial relationship with its employees.

No complaint was filed during the financial year under the Sexual Harassment of workmen at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report may contain objectives, projections, estimates, expectations and predictions that might be considered forward looking. These statements are subject to certain risks and uncertainties. Actual results may differ materially from those expressed in the Statement as important factors could influence the Companys operations such as Government policies, local, political and economic development, industrial relations, and risks inherent to the Companys growth and such other factors and the Company owns no obligation to publicly update these forward looking statements to reflect subsequent events or circumstances. Market data and product analysis contained herein has been taken from internal Company reports, Industry & Research publications, but their accuracy and completeness are not guaranteed and their reliability cannot be assured.