Wires & Fabriks (S.A) Ltd Management Discussions.

INDUSTRY STRUCTURE & DEVELOPMENTS

The Company mainly deals in technical products for the Paper Industry. The Paper Industry in India is growing at a rate higher than the GDP growth. Present per capita paper consumption in India being low, it is bound to increase, resulting in increased production of paper and increased consumption of companys products. The same is true in the case of other Asian countries. Our products requiring tailor made services offer us a great opportunity both by way of geographical advantage & local expertise.

OPPORTUNITIES & THREATS

Growth in the Paper Industry is a foregone conclusion. Besides growth in the domestic sector, growth opportunity also exists in the export sector, as Asia is the fastest growing region in the world for the paper sector. Besides domestic competition, competition from overseas suppliers may increase due to various developments in the Indian Economy. However, the Company has maintained its leadership due to continuous thrust on modernization & technology upgradation.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

Products for the Paper industry had a brief setback in the current economic scenario. Wind mills are performing satisfactorily.

FUTURE OUTLOOK

The expected completion of the Companys Expansion cum Modernisation Project in 2022-23, will make the Company ready for the future.This will improve the performance in the forthcoming years. The current economic scenario may however affect the results in short term.

RISKS & CONCERNS

Reduction in growth rate of Indian Paper Industry and increased competition both from domestic and overseas suppliers and foreign currency rates are main areas of concern. Costly equipments and constantly upgrading technology reduces margins. However, the emphasis on Research & Development has led to an inherent technical strength, which helps the Company to maintain its leadership and bottom-line. Natural calamities, pandemics or governmental actions such as lockdown, Covid related restrictions etc., may affect the performance of the Company. However the company plans & takes proper response to overcome the loss to the extent possible.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company has adequate internal control procedure commensurate with the nature of its business & size of its operations. Internal Audit is conducted at regular intervals and covers the key areas of operations.

DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company closed last financial year with lower turnover due to lockdown. The profitability too was affected. The Company plans to further strengthen the areas where more improvement opportunities exist.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company continues to give its high attention to its Human Resources. Various initiatives were successfully implemented during the year. Industrial relations continue to be cordial.

FINANCIAL RATIOS

The details on key financial ratios are produced below which enables to measure Companys operational efficiency, liquidity, stability and profitability, giving management, investors and other stakeholders more relevant information than raw financial data and to take better strategic, operational & financial decisions by using the widely popular, and arguably indispensable, technique of ratio analysis.

FY 2020-21 FY 2019-20
i. Debtors Turnover 2.99 3.15
ii. Inventory Turnover 4.10 3.96
iii. Interest Coverage Ratio 1.26 2.73
iv. Current Ratio 1.75 1.45
v. Debt Equity Ratio 0.71 0.92
vi. Operating Profit Margin (%) 2.08 2.87
vii. Net Profit Margin (%) 0.42 1.82
viii. Return on Net Worth (%) 0.84 4.00

Decrease in revenue from operations considering Covid-19 situations severely impacted Return on Net Worth, Operating and Net Profit Margin, in spite of reduction in Fixed Cost/ Expenses. The Debtors and Inventory Turnover are also affected. However, timely repayment of Term Loans as per schedule coupled with better utilization of borrowed working capital funds resulted in improved Debt Equity Ratio.

CAUTIONARY STATEMENT

Some of the statements made above are stated as required by applicable regulations. While they are based on the data available and the bonafide judgment of the management, the actual results may be affected by various factors, which may be different from what your management envisages in terms of future performance & outlook.

For and on behalf of the Board
K.K. Khaitan M. Khaitan
Place: Jaipur Chairman cum Managing Director Managing Director
Date: 31st May, 2021 DIN: 00514864 DIN: 00459612