faced Theyear gone by was marked by significant by the nascent global
economic recovery in the aftermath of the COVID-19 pandemic. Escalation of the
geopolitical conflict and the ensuing sanctions led to the worsening of supply chain
pressures, which were expected to ease post the pandemic. Commodity, energy, and food
prices shot up substantially amidst heightened volatility, exacerbating inflationary
pressures across advanced economies (AEs) and emerging market economies (EMEs) alike. For
most of the year, the global economy continued to grapple with multi-decadal high
inflation and slowdown of growth, leading to aggressive monetary policy tightening on a
global level, and a heightened risk of recession. Governments and central banks across
economies had to strike a balance between fiscal policy and monetary policy to stoke
growth, while restoring price stability and alleviating the cost-of-living pressures.
Towards the latter part of the year, as heightened interest rates started to affect
consumption, the pricing pressure started exhibiting softness, prompting central banks to
moderate the size and rate of pricing actions. Nonetheless, global growth is expected to
decelerate during 2023. The International Monetary Fund (IMF) forecasts global growth to
decline to 2.8% in 2023, from 3.4% growth in 2022, before rising to 3.0% in 2024 . Global
inflation is expected to fall from 8.7% in 2022 to 7.0% in 2023 and
4.9% in 2024, but will still be above the pre-pandemic (2017-19) levels
of about 3.5% In March 2023, the world economy had a bad scare when the aggressive
interest rate tightening manifested itself in the form of turmoil in the banking system in
some AEs. However, the risk from the events was successfully staved off through quick
responses by the respective governments. Continued rate hikes following the event
showcases the confidenceof the central banks in their economies and their ability to adapt
to changing circumstances. Overall, global economic activity remains resilient amidst the
persistence of inflation at elevated levels, turmoil in the banking system, tight
financial conditions, and lingering geopolitical hostilities.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The Wire & Cable industry in India is estimated to have grown in
low teens in FY23 to Rs. 680-730 billion in size, contributing to 40-45% of the Indian
electrical industry. Sectors like Power, Railways, Infrastructure, Oil & Gas, Telecom,
Real Estate, Renewables, Defence, Automobiles, etc. are the largest demand drivers for the
industry. Organised players command a lions share of the market, at roughly 70%,
while unorganised players largely dominate the rural geographies. With commodity prices on
a downward trajectory from the decadal high levels at the start of the year, the increase
in revenue was largely driven by volume growth, supported by the depreciation of the
Indian rupee against the US dollar. Robust demand from various end-user sectors such as
infrastructure, power distribution, railways, real estate, and renewable energy, coupled
with government stimulus packages and structural reforms led to the outperformance in
volume growth.
OPPORTUNITIES AND THREATS: Oppurtunities:
Rising demand for the EHV cables with growing EPC infrastructure
projects, where the Company faces less competition.
Governments focus on Infrastructure developments such as roads,
railways, ports, housing is increasing and is expected to create demand for electrical
goods.
With formalisation of economy and rising base of aspiring customers,
the demand for branded goods and organised companies is increasing.
Reviving demand from sectors such as metro rail, fertilizers, steel,
cement, IT and pharmaceuticals.
Increasing urbanization is expected to drive the demand for housing
sector, thereby, driving the demand of wires.
Structural demand for more and efficient T&D infrastructure.
Increasing renewable energy generation causing demand to rise for
T&D for power evacuation.
Threats:
The global economic slowdown and disruptions in trade and sectors.
Volatility in exchange rates and prices of key raw materials.
Increasing competition in the wires and cables industry.
Fast-changing technology and constant need for upgradation.
SEGMET WISE PERFORMANCE
The company operates in single segment of Wires and Cables.
The turnover of the company has increased significantly to Rs. 27214.70
lakhs in current financial year as compared to Rs. 15911.56 lakhs in the preceding
financial
OUT LOOK
The Company is positive about the growth prospects of the Wires &
Cables (W&C) industry in the near to mid-term. With the governments push towards
manufacturing and infrastructure, the real estate being in its upcycle, and the economic
climate favourable, the W&C industry is poised for accelerated growth in the near
term. the Company is in a strong position to reap the benefit of the expected growth. The
demand for W&C industry is expected to be driven by factors such as expansion and
modernisation of power transmission and distribution infrastructure, upgradation and
expansion of the railway network, increased investments in metro railroads, smart grid
initiatives, and development of smart cities. In addition to catering to the demand from
these opportunities, Delton will look to drive growth by focusing on the twin
opportunities of import substitution and that from rural geographies. The
Governments emphasis on ‘Atmanirbhar Bharat has led to an increase in
investment in sunrise sectors such as Renewables, Defence, and Electric Vehicles. These
sectors have traditionally depended on imported cables for their requirements. The rapid
rise of the organized sector and the governments focus on investment in
infrastructure and development projects would promote large-scale growth across sectors,
such as infrastructure, power, telecom, transmission and distribution, manufacture, real
estate, engineering, and automotive. Growth in renewable power generation, expansion and
revamping of Transmission & Distribution (T&D) infrastructure, increasing
investments in metro railways and smart grid projects and growth in the data center sector
will also contribute to a robust demand for wires and cables in India. Increasing
urbanization and commercialization are expected to bolster investments in the real estate
industry and drive the demand for wires and cables.
RISKS AND CONCERNS:
Higher inflation remains a challenge and the Reserve Bank of
India (RBI) increased the repo rate by 250 basis points in FY
2022-23 to tame inflationary pressures. As a result, Indias
Consumer Price Index (CPI) inflation rate subsided to 4.25%
(provisional) in May 2023 against 4.70% recorded in April 2023.
Further, the RBI approved international trade settlements in Indian Rupees (INR) to
promote the growth of global trade with an emphasis on exports from India and to support
the increasing interest of the global trading community.
Sharp increase in commodity prices could lead to increase in cost of
finished goods impacting the affordability and consumer sentiment, Hyper competitiveness
is normal, but it becomes a risk in case it leads to irrational behavior in the market in
terms of pricing and other trade practices.
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.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has a well-framed internal control system commensurate with
the size and nature of its business. These internal controls ensure safeguarding of assets
from unauthorised use or disposition, proper recording and reporting of all transactions
and compliance with applicable regulatory requirements. The internal control systems are
reviewed and modified continually to keep up with the changes in business environment and
statutory requirements.
The framework is monitored by the internal audit team of the
Company. The Audit Committee of the Board is periodically apprised of
the internal audit findings. The Audit Committee reviews the efficacy and effectiveness of
the internal control system, takes corrective actions and suggests measures for
strengthening it. The Company has a robust Management Information which forms an integral
part of the control mechanism.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
During the year under review, the Company achieved Revenue from
operations of Rs. 27214.70 lakhs as compared to Rs.
15911.56 lakhs in the previous financial year. Further, the Company has
earned profit after tax and exceptional items of Rs.57.75 lakhs in the current financial
year as against profit of Rs. 76.61 lakhs in the previous financial year.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT,
INCLUDING NUMBER OF PEOPLE EMPLOYED
Human capital is the most essential part of the Company. The Company
keeps promoting a collaborative work environment where all the employees feel safe and a
part of the Company. The Human Resources policies of the Company are aimed at attracting,
nurturing and retaining talent in a constantly evolving business environment while
ensuring trust, transparency and teamwork amongst its employees.
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.
DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED
TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED
EXPLANATIONS:
Ratios |
2022-23 |
2021-22 |
Variation
(in %) |
for change Reason |
Debtors Turnover |
6.21 |
4.54 |
36.78% |
Variance on account of
increase in sales and production volume during the year. |
Inventory Turnover |
2.77 |
1.86 |
48.92% |
Variance on account of
increase in sales and production volume during the year. |
Interest Coverage Ratio (in
%) |
1.5 |
1.89 |
-20.63% |
Variance on account of
increase in short term borrowings during the year |
Current Ratio |
1.38 |
1.368 |
0.88% |
No material variance |
Debt Equity Ratio |
1.44 |
1.26 |
14.29% |
Variance on account of
increase in short term borrowings during the year |
Operating Profit
Margin |
6.61% |
6.48% |
2.02% |
Variance on account of
increase in improvement accounting policies and other explanatory in sales volume during
the year |
Net Profit Margin |
0.21% |
0.48% |
-55.93% |
Variance on account of lesser
net total comprehensive income during the year |
Net worth Ratio |
1.12% |
1.66% |
-32.53% |
Variance on account of lesser
net total comprehensive income during the year |
The net worth during the financial year ended on 31st March,
2023 was decreased as shown in above table due to decrease of comprehensive income during
the current financial year as compared to previous financial year ended on 31 st
March, 2022.
DISCLOSURE OF ACCOUNTING TREATMENT:
The Company prepared its Financial Statements to comply with the
Accounting Standards specified under section 133 of the Act read with the Companies
(Indian Accounting Standards) Rules, 2015, as amended from time to time. These Financial
Statements includes Balance Sheet as at 31st March 2023, the Statement of
Profit and Loss including Other Comprehensive Income,
Cash Flow Statement and Statement of changes in equity for the
financial year ended on 31st March, 2023, and a summary of significant
(together hereinafter referred to as "Financial Statements").
CAUTIONARY STATEMENT
Statements in this report describing the Companys objectives,
projections, estimates and expectations may constitute "forward looking
statements" within the meaning of applicable laws and regulations that involve risks
and uncertainties. Such statements represent the intention of the Management and the
efforts being put into place by them to achieve certain goals. Actual results might differ
materially from those either expressed or implied in the statement depending on the
circumstances. Therefore, the investors are requested to make their own independent
assessments and judgments by considering all relevant factors before making any investment
decision.
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