dredging corpn Management discussions

GLOBAL SCENARIO

1. The global dredging market size is expected to grow from $12.11 billion in 2022 to $12.58 billion in 2023 at a compound annual growth rate (CAGR) of 3.9%. The Russia-Ukraine war disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term. The war between these two countries has led to economic sanctions on multiple countries, a surge in commodity prices, and supply chain disruptions, causing inflation across goods and services and affecting many markets across the globe. The dredging market is expected to grow to $14.39 billion in 2027 at a CAGR of 3.4%.

2. The dredging market research report is one of a series of new reports from The Business Research Company that provides dredging market statistics, including the dredging industrys global market size, regional shares, competitors with a dredging market share, detailed dredging market segments, market trends and opportunities, and any further data you may need to thrive in the dredging industry. This dredging market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

3. Increasing sea-borne trade is expected to propel the growth of the dredging market going forward. Seaborne trade refers to the transportation of goods that takes place through accessible water routes and ports. Dredging helps sea-borne trade by expanding existing ports, maintaining existing waterways, and building new ports and waterways. increasing waterborne trade is driving the growth of the dredging market. Product innovations have emerged as a key trend gaining popularity in the dredging market. Major companies operating in the dredging sector are focused on developing new innovative products to strengthen their position in the market. The dredging market includes revenues earned by entities through dredging services such as capital dredging, maintenance dredging, and inland water dredging. The global economy witnessed mixed trends during the fiscal year. Despite various challenges, the dredging industry showed resilience, mainly driven by increasing infrastructure investments and environmental concerns related to waterways and coastal areas.

4. The dredging market can be segmented based on type, end-user industry, and region. Different types of dredging vessels are suction, jet lift, air lift, bucket, and others. The suction type of dredging vessel operates by sucking through a long tube, akin to some vacuum cleaners on a larger scale. The suction vessel is further bifurcated into trailing suction and cutter suction. Jet lift dredging vessel uses the Venturi effect of a concentrated high-speed stream of water to pull the nearby water, together with bed material, into a pipe. Airlift is a type of small suction dredging vessel. Bucket dredger is equipped with a bucket dredge, a device that picks up sediment by mechanical means, often with many circulating buckets attached to a wheel or chain. Other types of dredging vessels include pneumatic, water injectors, and snagboat. Based on end-user industry, the dredging market can be segregated into oil & gas, trading, tourism, and others.

5. Increase in global trade carried out through the sea and rise in transportation of goods through the sea using large container vessels and ships are factors offering lucrative opportunities to the dredging market. Port infrastructure needs to be expanded; dredging is required to keep ports in working condition. Global demand for energy and gas has been rising. Exploration of oil and gas is carried out primarily in remote areas. For this process, dredging companies are required to construct ports. Dredging is also being carried out on beaches to keep them in prime condition. Dredging is a capital intensive process. This is one of the major restraints of the dredging market. New technological advancements are emerging in order to lower manufacturing costs and increase the productivity of dredging.

6. Large European dredging companies have traditionally dominated the international dredging market. Europe has been the traditional hub of the international dredging market with activities concentrated in the Netherlands, Belgium and the United Kingdom with the five leading Dutch and Belgian companies highlighted in the table below controlling a substantial portion of the international dredging market.

7. The major European companies account for a large proportion of the total international dredging fleet. Responding to demands from customers, continuous efforts are being made to increase the size of dredgers, improve technology and reduce costs. Jumbo trailer suction hopper dredgers with hopper capacities as large as 46,000 cubic meters are being deployed.

8. Many new markets have begun to open in recent years as dredging projects have become more complex and as international dredging companies develop new dredging techniques and more efficient dredgers to reduce unit costs well below that of most local contractors. In addition, dredging contracts increasingly include more demanding environmental clauses that must be satisfied during the performance of the work. Those contractors able to meet stringent environmental requirements are therefore better placed to win contracts.

9. In addition to the leading international dredging companies, countries including China, Japan, Korea, the United Kingdom and the Ukraine also have large dredging companies mostly focused on their respective domestic markets. In addition, new players, especially from Asia, are entering the dredging market, although they are smaller in size.

10. Increasing emphasis on globalization and the need to synergize existing fleet strengths and competition may lead to consolidation in the international dredging industry.

11. Internationally, the dredging industry is experiencing changing regional patterns. Demand in Europe, which was formally concentrated in specific countries such as the Netherlands, Belgium and the United Kingdom, has spread throughout Europe in recent years. However, overall growth for Europe has been only marginal. Singapore, Hong Kong and the Middle East have witnessed higher levels of growth in dredging operations, which is expected to continue in the coming years. Governments or Port Management Authority issue port maintenance contract for dredging which has given impetus to the dredging maintenance business in the coastal areas. However, volatility in the oil & gas sector owing to ongoing coronavirus pandemic is expected to cause stagnancy in the global dredging market for next couple of years as governments have stopped or reduced investment for port maintenance amid COVID-19 pandemic.

12. As such, the COVID-19 situation which had an impact on the global shipping industry is also bound to have serious impact on the dredging volumes owing to the reduced trade and liquidity issues. It is difficult to quantify the same at this juncture and a clearer picture is expected to emerge in near future as the COVID-19 situation eases.

INDIA SCENARIO

13. Indian Dredging companies have very negligible presence outside the country. On the domestic front, there is no major initiative being taken by leading Indian players in Capital Dredging Market. Except, for few small to medium size contracts, sizeable Capital Dredging contracts are routinely bagged by Belgian/ Dutch multi- nationals. In general, Indian companies lack large Cutter Dredgers / Rock Breakers in their Fleet. Dredging Corporation of India (DCI) is a notable exception in this regard. We have a fleet of one Cutter Suction Dredger DR- XVIII; and one Inland Dredger. There has been efforts by few other companies in this regard but there has been no long-term sustainability shown by Indian Dredging companies in the field of Capital dredging. The Ground reality is that Indian Dredging Companies are by and large, are confined to Maintenance Dredging Market. The Maintenance Dredging market is cramped, with Trailer Suction Dredgers of all shapes and sizes and of diverse origins, chasing the same pie.

14. The competition is so intense that one major player has picked up a Maintenance Dredging contract at a Major port on West coast of India at rate less than what it got just few years back. This is a very pleasant situation for clients, but this price war will only have losers in the end as far as Dredging Companies are concerned.

INDIAN DREDGING MARKET

15. Indian dredging industry is driven largely by the dredging demand coming from its major and non-major ports. With recent developments to boost domestic manufacturing and Governments focus to improve Indian maritime sector, dredging industry is expected to be a direct beneficiary. Indian ports are preparing themselves to handle more cargo by accommodating bigger vessels and aspire to meet international standards in port infrastructure in a bid to achieve economies of scale. As a result, ports are moving towards improving the basic infrastructure like deepening of channels, mechanization and creation of more berths which will create demand for dredging industry. Further, creation of new green field ports would also drive the demand for dredging in the domestic market.

16. As per Ministry of Port, Shipping and Waterways, over the next few years, most of the major ports would improve their capacity to accommodate bigger ships. Given these prospects, coupled with new developments coming in from Navy, national waterways and off shore exploration, scope of Indian dredging industry seems vast. Indian Shipping Industry has over the years played a crucial role in the transport sector of Indias economy, providing an essential means of transport for crude oil, petroleum products and other cargos. Approximately 95% of the countrys trade by volume and 68% by value are moved through Maritime Transport. The Ports in the country handle around 90% of EXIM Cargo by volume and 70% by value. In order to meet the ever increasing trade requirements, expansion of Port Capacity is accorded the highest priority. While increasing the capacity of the major ports, action has been initiated by the Government to improve the operational efficiencies through mechanization, digitization and process simplification. As a result over the years the installed capacity & cargo handled by the Major Ports have increased considerably. Besides the efficiency parameters like average turnaround time, average output per ship berth day have also improved considerably.

17. Since about more than 90% of Indias trade by volume is conducted via the countrys maritime route, there is a continuous need to develop Indias ports and trade related infrastructure to accelerate growth in the manufacturing industry and to assist the Make in India initiative. India has 12 major ports and approximately 200 non-major ports administered by Central and State Governments respectively.

18. As per the studies conducted under the Sagarmala Programme, it is expected that by 2025, cargo traffic at Indian ports will be approximately 2500 MMTPA while the current cargo handling capacity of Indian ports is only 1500 MMTPA. A roadmap has been prepared for increasing the Indian port capacity to 3300+ MmtPa by 2025 to cater to the growing traffic. This includes port operational efficiency improvement, capacity expansion of existing ports and new port development.

19. Under Project Unnati, the global benchmarks were adopted to improve the efficiency and productivity KPIs for 12 major ports. Around 116 initiatives were identified across 12 major ports to unlock more than 100 MTPA capacity just through efficiency improvement. Out of which, 93 initiatives have been implemented to unlock more than 80 MTPA capacity. For all the 12 major ports, master plans have been finalized. From the port master plans, 92 port capacity expansion projects (cost: Rs. 58,884 Cr) have been identified for implementation over next 20 years and are expected to add 712 MTPA to the capacities at major ports.

20. With the objective of propelling India to the forefront of the Global Maritime Sector, Ministry of Ports, Shipping and Waterways has formulated Maritime India Vision 2030 (MIV 2030), a blueprint to ensure coordinated and accelerated growth of Indias maritime sector in the next decade. MIV 2030 identifies over 150 initiatives across 10 themes covering all the facets of the Indian maritime sector and is a comprehensive effort to define and meet national maritime objectives. DCI is actively involved in one of these initiatives - conduct study for identifying innovative methods for recycling / re-usage of the dredged material.

21. As per Industry estimates, the Indian annual dredging market, was estimated as around 147-157 Million cubic meter (mcm) with maintenance dredging constituting around 70% of Indian dredging market. Capital dredging segment in India has been impacted by a number of factors such as delay in land acquisition and receiving necessary environment and project clearances. Since major ports had been created at natural harbours (Kandla) or at the mouth of rivers (Haldia) or at Cochin, the siltation pattern is very high at these ports leading to a very high maintenance dredging demand at major ports. While non-major ports have been largely created with artificial harbours and break water, reducing the demand for annual maintenance dredging.

GUIDELINES ON UNDERTAKING DREDGING AT MAJOR PORTS ISSUED BY MINISTRY OF SHIPPING

22. The Ministry of Ports, Shipping and Waterways has issued the new Dredging guidelines to be followed by Major Ports. As per the new Guidelines, the Major Ports having management control of Ports Owned Dredging Company may award the dredging works of the respective ports to the company on nomination basis on approval of Board of Trustees/ Directors of the Port. Whenever this route for award is followed the principle of competitive market price discovery for the same quality and conditions shall be followed (to ensure high efficiency in cost, time and quality in execution of dredging projects).on undertaking dredging at major ports issued by Ministry of Shipping, all major ports shall invite open competitive bids for capital / maintenance dredging works. This is expected to help the Company in getting more projects directly from the promoter ports.

23. The present slump in the global dredging market and consequent entry of global players either directly or through their Indian arms competing to get the contracts at competitive rates has constrained DCI to quote competitively. This has put the financials of the Company under severe strain because of increasing cost due to frequent repairs and lay-up of the ageing dredgers.

GROWTH DRIVERS

24. New capacity creation by Indian ports, including channel deepening, is the single largest factor determining growth of Indian dredging market. Although, dredging demand would also come from other players such as Navy and shipyards, but the demand is miniscule as compared to ports.

25. Shallow water dredging demand due to development of national waterways is considered separately as the asset requirements, technology and players are completely different from maintenance and capital dredging market.

26. Sagarmala Plan: - The Government of India has envisioned the Sagarmala Program, which aims to exploit Indias 7,500 km coastline and 14,500 km of potentially navigable waterways. It promotes port-led development in the country by harnessing strategic locations on key international maritime trade routes. A National Perspective Plan has been developed under this program, paving the way for 150 projects with investments of ~INR 4,00,000 Crore in the next 10 years. These projects have been identified across areas of port modernization and new port development, port connectivity enhancement, port-led industrial development and coastal community development.

27. Additional infrastructure would include development of coastal economic zones ("CEZs") covering all maritime states and union territories. The CEZs would be segregated on the basis of manufacturing clusters and basic input industries. The manufacturing cluster would include labour intensive sectors of electronics, apparel, leather products, furniture and food-processing. However, basic input industries would include clusters for power, refineries and petrochemicals, steel and downstream industries and cement. Setting up infrastructure for these clusters will require an investment of INR 1,00,000 Cr. and is expected to attract an additional INR7,00,000 Cr. of industrial investment.

28. It is foreseen that Major Ports shall deepen and widen their navigational channel to attract deep draft vessels and the forecast indicate, net dredging quantity may be approximately 3 billion cu m (1.6 billion cu m capital and 2.4 billion cu m maintenance) to be dredged in next 10 years.

29. Subsequently, a number of channel/port deepening projects are currently being undertaken by various ports. In India, many ports are incapable of berthing fully-laden large vessels. Large vessels can be berthed only by dredging, which offers significant potential for higher dredging activity in the Indian market.

30. Beneficial use of dredged material is another area which is being given priority as per the dredging guidelines and also Maritime India Vision 2030. The Company is actively involved in this vertical and is expected to make headway in this financial year.

31. Given the prospects of development and maintenance of existing major ports, building new ports, onshore resources exploration, demand from navy and, more interestingly, projects envisaged for national waterways, the scope for dredging is potentially vast.

ACQUISITION OF NEW DREDGER

32. We are happy to inform you that Ministry has accorded approval to the recommendations of the Expert Committee constituted for the purpose for procurement of 12000 m3 TSHD dredgers by DCI to be constructed at Cochin Shipyard Limited under the AtmaNirbhar Program - first in 2021, second in 2023 and the procurement of third dredger should be on the basis of analysis of performance of 2 dredgers. The third dredger capacity shall be determined based on gap viability analysis of the market in 2025 to achieve requirements of dredging at Indian Major Ports as envisaged in Maritime Vision 2030. The agreement between Dredging Corporation of India and Cochin Shipyard Limited was signed on 17/03/2022 and tripartite agreement between DCI-CSL-IHC was signed on 13/04/2022. The Cost of the dredger is 104.59 million EUROs. The first and Second installment was paid on 04/11/2022 and 14/11/2022 respectively. The third and fourth installments was paid on 11/04/2023 and 04/08/2023 for this year. This is a major milestone in the new market for which the company was working more than a decade.

PERFORMANCE

33. The capacity utilization in number of days and quantity as against the targets during the year is as under:-

	Target	Actual	% Utilisation
No. of Days	3709.00	3974.62	80.20%
Quantity (Mln. Cu.M)	676.34	661.48	97.80%

FINANCIAL PERFORMANCE

34. The Financial performance during the year is as under:-

Rs. in lakhs

PARTICULARS	2022-23	2021-22
Total Income	1,16,803	80,347
Total Expenditure	11,51,419	81,540
Profit after Tax	1,384	(1193)
EPS	5.42	1.90

KEY STRENGTHS OF DCIL

35. Premier dredging company in India:- DCIL is a premier dredging company in India. The Company is also the preferred dredging company for Major Ports and the Indian Navy. The Company has been in this business since 1976 and has been catering to the dredging requirements of the major ports/ Indian Navy since then. Owing to the long association with the Major Ports, the Company is the most preferred company for dredging requirements of most of the Major Ports and the Indian Navy.

36. One of the largest hopper capacity in the Indian market: - DCIL has one of the largest hopper capacity in the Indian market which provides flexibility to handle projects involving larger dredging volumes as well as higher number of projects compared to any of the competitors in the Indian maintenance dredging market.

37. To maintain the value and effectiveness of the fleet, the Company emphasizes preventive maintenance so as to reduce the downtime, increase profitability and enhance the vessel life. With the addition of the Inland cutter suction dredger, the Company has re- enteredintotheinlanddredgingsectorandisexpectingtobeamajorplayerinthesame.

38. The dredgers (DR-XIX, XX and XXI) are the premium assets of DCIL. They are equipped with the best technology among the fleet of Indian companies. The dredgers have shore pumping facilities which enables them to carry out the high premium jobs like aggregate dredging, beach nourishment and reclamation works.

39. Strong relationships with Customers:- The Company has been catering to the dredging requirements of the Major Ports and the Indian Navy right from its inception in 1976 and has a better understanding of the dredging requirements of the Indian Ports. The Company is the leader in maintenance dredging in India through its combination of usage of advanced equipment and experience.

40. Forty years of dredging experience:- DCIL has more than 40 years of dredging experience at the Major ports in India, which gives DCI the experience of dredging at locations with varying soil characteristics. Although the pre-qualification criteria in the dredging tenders needs the recent dredging operation history (5-7 years), 40 years experience provides credibility to DCIL for bidding in the projects outside the country.

41. The Companys senior managers have vast experience in the dredging and maritime industries. The Company believes that this experience provides the Company with a significant advantage over its competitors. The Companys floating personnel who manage the dredgers and the management team who give the support services are well trained professionals having vast experience in the dredging and maritime industries.

OUR WEAKNESS/ CONSTRAINTS AND STEPS TAKEN TO OVERCOME THE SAME

42. The dredging fleet of DCI has an average age of more than 20 years. Some of the equipment of the old vessels have already crossed their useful life. These equipment need extensive refurbishment which has resulted in the loss of production due to lower performance of vessels and increased breakdown days. Also, some of the dredging contracts limit the age of equipment to be deployed in the project as their pre-qualification criteria. To this extent, the Company has already taken steps to scrap some of assets which have outlived their useful life and found not to be profitable after a techno economic viability study. Accordingly Dr-Acquires and TUG -VII have been decommissioned and sold as scrap during the year. In order to overcome the reduction in capacity, DCI has initiated action procurement of 12000 Cu.M Hopper Capacity Dredger.

43. High lead time for the procurement of the spares and stores is resulting in delays in repairs and dry docks. This is primarily due to the aged dredgers and as stated the company has taken steps to scrap some of the dredgers which are not economically viable and outlived their life. Further ERP is being implemented for better management of inventory.

44. Retirement and non-availability of skilled manpower in the areas of project management and limited availability of ship repair facility is leading to the delays in project execution as well as dry-docking of the vessels. The project management process needs to be fined tuned to make the execution of projects more efficient and time bound. Preventive maintenance dry-dock planning also needs to be fine-tuned to cut down both cost and time overruns. In this direction, the Company has outsourced the manpower requirement and technical maintenance of two vessels. Further action will be taken in similar lines after cost benefit analysis of the same. DCI exploring the possibility to establishment of Dredge Training Institute & Repair facility.

45. High attrition leading to increased contractual manpower: The dredging industry has a shortage of skilled manpower which makes the retention of employee very difficult for DCI a PSU. It is easier for people to get expertise in the industry and leave the company for lucrative offers from its competitors. In the past DCI has lost a lot of its experts to private and the international counterparts in the Indian market. To this end, the company has in place a robust career progression policy for shore based employees. The remuneration package for floating employee is at par with the industry standards in India. The company is trying its best to keep the attrition levels at manageable levels.

OPPORTUNITIES

46. Since its inception DCI has been involved mainly in the maintenance dredging works at the major ports. Although it has executed capital dredging projects in the past, the expertise is not developed to the levels of the international players. As the growth opportunity in the Indian maintenance dredging market for a single player is limited upto INR 1,000 crore DCI needs to diversify to other segments and businesses related to the dredging industry. The diversification opportunities can be classified into following categories:

DIVERSIFICATION IN CORE BUSINESS

47. The core business diversification opportunities include the dredging services in segments other than maintenance and capital dredging as well as the geographical diversification. The other segments in dredging would include beach nourishment, inland dredging, aggregate dredging, oil & gas dredging, shallow water dredging, offshore mining and land reclamation activities, reservoir dredging, beneficial use of dredged material etc. However, the priority would be to further strengthen the presence in the core dredging market.

DIVERSIFICATION TO NEW BUSINESSES

48. Diversification to new businesses include the forward and backward integration opportunities for DCI which can bring high synergy among the businesses. Forward integration would include the diversifying to the businesses which use dredging services like ports, marine construction and offshore installation activities. Backward integration includes the opportunities like ship building, ship repair, bunker barge and spare parts manufacturing.

OUR STRATEGIES

49. We intend to increase income from operations and strengthen our domestic and international competitive position by expanding our operations in both our traditional and new dredging services and adopting a pro-active marketing strategy for our domestic and foreign operations.

50. Enhancement of market share in maintenance dredging and more participation in capital dredging in India. Making forays in foreign dredging market: Apart from consolidation in the Indian dredging market, we have plans to make forays in the foreign dredging market. The initiatives taken for setting our foot once again in foreign waters is likely to materialise. DCI has already executing the dredging contract for Mongla Port, Bangladesh.

51. Enhancement of the fleet capability:- In continuation of the efforts to sustain the existing capacity our Company plans to higher hopper capacity trailer suction hopper dredgers. Our Company also plans to refurbish the existing aged dredgers so as to increase their effectiveness and enhance their economic life. Further, with the impetus given to inland waterways by the Government and the consequent necessity and demand for inland dredging, the company has added to its fleet an inland cutter suction dredger which has already joined the fleet.

52. Reducing operational costs:- Further, to the capacity enhancement initiatives discussed above, your Company also has taken initiatives to reduce operational costs by focusing on fuel efficiency in ship operations and ship procurement and further streamlining the spare parts procurement systems. Your Company also proposes to have tie-ups with ship repair yards for continued maintenance of our vessels for a period of time so as to make available the dredgers for a guaranteed minimum number of days every year.

53. Strategic alliances through long term contracts with major ports:- The Company is exploring to have strategic alliances with major ports. This will ensure assured business for the Company and enable the Company to plan in advance regarding the deployment of the vessels. The Company is also exploring to act as nodal agency to meet all dredging requirements for major ports in the country.

54. Optimize capacity utilization:- The Company intends to continue to optimize its capacity utilization by continuous project monitoring and review, reducing equipment downtime through preventive maintenance and working with repair yards to accelerate dry dock repair periods, and increasing computerization, including introducing online connectivity between dredgers, projects and the head office the Company also intends to continue to invest in quality pre-dredging surveys and equipment and continue to invest in repairs and maintenance. Through a renewed focus on training, your Company intends to introduce specific project planning and management initiatives to educate its staff to identify and develop new market opportunities. The Company believes in the introduction of best practices in procurement, costing and working capital management, along with the introduction of tailored human resources practices, participatory management and new technologies, which will create new competencies in its organization and add value for its dredging customers.

55. Material developments in Human Resources / Industrial Relations front, including number of people employed. THREATS

56. The Company perceives the following threats

i Increasing foreign competition.

ii Increasing competition from Indian dredging companies.

iii Frequent and expensive repairs to dredgers due to ageing.

iv Possible reduction in expenditure on dredging by Government/Ports post COVID-19 situation in the short term.

57. The increased competition has in a way helped the company to tighten up and become more competitive.

FOREIGN EXCHANGE RISKS AND CONCERNS

58. The foreign exchange variations may cause a dent in the cash flows apart from effecting the results of the Company due the debt service obligations in foreign exchange.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

59. The Company has reasonable system of delegation at proper levels and an adequate system of internal control commensurate with its size and nature of its business. The Company has an adequate and independent internal audit department for conducting extensive audit of various important operational and financial matters. The internal audit work at Head Office and some of the projects has been outsourced to Chartered Accountant firms. The internal controls are reviewed by the Internal Audit Department. The Vigilance Department deals with vigilance and disciplinary cases with emphasis on preventive vigilance. C&AG conducts proprietary audit. The Company has constituted an Audit Committee and significant audit observations and follow up action thereon are reported to the Audit Committee. The proceedings of the Audit Committee meetings and also other Sub-Committee meeting of Directors are submitted to the Board.

INDUSTRIAL RELATIONS

60. The industrial relations in the Corporation continued to be cordial throughout the year 2022-23 CORPORATE SOCIAL RESPONSIBILITY

61. The Board of Directors of the Company have formulated the Corporate Social Responsibility Policy for the Company and also constituted a Sub-Committee of Directors for implementation of the same. The report of the Corporate Social Responsibilities activities of the Company is attached to the Directors Report.

FUTURE READYING THE BUSINESS FOR A POST COVID-19 WORLD

62. Companys normal operations have been impacted in a number of ways as Lockdown impeded conducting surveys. Lockdown imposed across the country, regimented deployment of manpower leading to shortages at the work sites and yards , inordinate delays in import of emergency Spares which are required to carry out the scheduled dry-docks, closure of workshops, lack of OEM support, logistic constraints and risk of virus infection in FY 2019-20, 2020-21 ,2021-22 and 2022-23. It also imposed delays in both Dry-docking / running repairs in yards, impeded conducting surveys and resulted in postponement of securing new work orders. Some of the vessels became either non-operational or operating at suboptimal efficiencies in FY 2019-20 as well as 2020-21 and 2021-22. Notwithstanding constraint, management has taken a number of measures in the last three months and will continue to take best possible steps to keep the operations. A definitive assessment of the impact on business is highly dependent upon the circumstances as they evolve. The management is monitoring the situation closely.

RATIOS

63. The following remaining information w.r.t. 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 therefore as per addition of new sub clause (i) under clause 1 in Part B (‘Management Discussion and Analysis) of schedule V of SEBI (LODR) Regulations, 2015.

Particulars	2022-23	2021-22	Change in %
Debtors Turnover	4.24	3.88	9.25
Inventory Turnover	7.89	5.01	57.29
Interest coverage Ratio	0.86	0.89	-3.65
Current Ratio	0.90	0.87	3.50
Debt Equity Ratio	0.20	0.19	1.73
Operating Profit Margin (%)	0.15	0.15	-
Net Profit Margin (%)	0.01	0.005	50
Return on Net worth (%)	1.07	0.37	070
Debt Service Coverage Ratio	0.50	0.37	36.32

Explanation for change in Ratios more than 25% as compared to previous year:

1. Debt Service Coverage Ratio: The increase in Debt Service coverage Ratio by 36.32% is mainly on account of increase in EBITDA and reduction in Debt obligations as compared to previous year.

2. Return on Equity Ratio: The increase in Return on Equity Ratio by 248.05% is mainly on account of increase in operating profit during the year as compared to previous year.

3. Inventory Turnover Ratio: The increase in Inventory Turnover Ratio by 57.29% is mainly on account of increase in Operational income and reduction in Inventory balances during the year as compared to previous year.

4. Net Capital Turnover Ratio: The increase in Net capital Turnover Ratio by 43.49% is mainly on account of increase in Operational income during the year as compared to previous year.

5. Net Profit Ratio: The increase in Net capital Turnover Ratio by 101.82% is mainly on account of increase in Operational income during the year as compared to previous year.

6. Return on Capital employed : The decrease in Return on Capital Employed by 2732.83% is mainly on account of increase in interest cost expenses of Rs.2002.60 lakhs for FY 2022-23 as compared to previous year interest of Rs.1064.74 Lakhs.

7. Return on Investment (ROI) :This ratio is not applicable for the current year and previous year.

CAUTIONARY STATEMENT

64. The report contains forward-looking statements, identified by words like ‘plans, ‘expects, ‘will, ‘anticipates, ‘believes, ‘intends, ‘projects, ‘estimates and so on. All statements that address expectations or projections about the future, but not limited to the Companys strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realised. The Companys actual results, performance or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. The Company disclaims any obligation to update these forward-looking statements, except as may be required by law.