iifl-logo

Durlax Top Surface Ltd Management Discussions

40.4
(19.88%)
Apr 1, 2025|12:00:00 AM

Durlax Top Surface Ltd Share Price Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the Financial year ended on March 31, 2024, March 31, 2023, March 31, 2022. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 29 of this Red Herring Prospectus, which discusses several factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Durlax Top Surface Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the financial year ended on March 31, 2022, March 31, 2023, March 31, 2024, included in this Red Herring Prospectus beginning on page 163.

BUSINESS OVERVIEW

We are engaged in the business of manufacturing of solid surface material, which is sold across India, through an extensive distribution network of distributors and direct customers and also exported to various countries such as Dubai, Bahrain, Greece, Nepal. We operate through two brands namely LUXOR? and ASPIRON?, which provide a wide range of solid surfaces. Our LUXOR? brand offers Acrylic UV Solid Surfaces, while ASPIRON? offers Modified Solid Surfaces.

Situated in Vapi, our manufacturing facility is equipped with German and South Korean technologies and advanced machinery to produce solid surface materials. We aim to meet the demands of our customers and create pleasing and functional spaces across various sectors.

Our solid surfaces find applications in residential, commercial, hospitality, healthcare, exterior, and diverse industries, providing durable solutions for countertops, vanities, offices, retail spaces, hotels, hospitals, outdoor projects, and more.

Capacity and Capacity utilisation

The following table sets forth certain information relating to capacity utilization of our Units calculated on the basis of total installed production capacity and actual production as of/ for the periods indicated below:

Products Units 2021-22 2022-23 2023-24
Capa city Produ ction Utiliza tion Capa city Produ ction Utiliza tion Capa city Produ ction Utiliza tion
Solid Surface sheet No. of Sheet 1,20, 000 93,822 78.19 % 1,20, 000 1,07,00 0 89.17 % 240,0 00 1,72,72 4 71.97 %

Note:

Batch per day is considered based on 8 hours working of plant per day.

No. of working days considered in the FY 2021-22 is 300 days and FY 2022-23 is 300 and FY 2023-24 is 300 days.

Production has achieved 1,72,724 sheets in 2 Shifts.

As certified by M-Tech Services LLP, Independent Chartered Engineers vide their certificate dated May 1, 2024.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

In the opinion of the Board of Directors of our Company, there have not arisen, since the date of March 31, 2024 as disclosed in this Red Herring Prospectus, any significant developments or any circumstance that materially or adversely affect or are likely to affect the profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

1. Heavy reliance on a few customers and absence of long-term agreements poses a significant risk to our business and financial performance.

2. General economic conditions in India where we have ongoing businesses like COVID-19, changes in laws and regulations.

3. Underutilization of our production capacities could hinder our ability to meet market demand effectively, potentially impacting our overall business performance and growth prospects.

4. Companys inability to retain the experienced staff.

5. Increased market fragmentation.

6. Competition with existing and new entrants

7. Disruptions in the supply chain can lead to higher costs, reduced production, and lost sales.

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under

Chapter titled "Financial Information" beginning on page 163 of the Red Herring Prospectus.

RESULTS OF KEY OPERATIONS

The following table sets forth select financial data from our restated financial statement of profit and loss for the financial years ended March 31, 2024, 2023 and 2022 the components of which are also expressed as a percentage of total revenue for such period and financial years.

Particulars For the year ended March 31, 2024 % of Total Revenue For the year ended March 31, 2023 % of Total Revenue For the year ended March 31, 2022 % of Total Revenue
Revenue from operation 9,076.42 99.92% 6,673.83 99.84% 4,735.82 99.87%
Other income 7.51 0.08% 10.37 0.16% 5.99 0.13%
Total Revenue 9,083.93 100.00% 6,684.20 100.00% 4,741.81 100.00%
Cost of materials consumed 7,447.64 81.98% 5,745.46 85.96% 4,021.41 84.81%
Changes in Inventories of stock in trade (329.54) (3.63%) (464.84) (6.95%) (356.26) (7.51%)
Employee Benefit Expenses 169.79 1.87% 156.94 2.35% 91.59 1.93%
Finance Cost 378.59 4.17% 343.88 5.14% 327.03 6.90%
Operational and Other Expenses 685.01 7.54% 454.59 6.80% 315.18 6.65%
Depreciation and Amortization Charges 211.16 2.32% 232.55 3.48% 265.24 5.59%
Total Expenses 8,562.65 94.26% 6,468.58 96.77% 4,664.19 98.36%
Profit before tax extraordinary item 521.29 5.74% 215.62 3.23% 77.62 1.64%
Extraordinary item - 0.00% - 0.00% - 0.00%
Profit / (Loss) before Tax Tax Expenses 521.29 5.74% 215.62 3.23% 77.62 1.64%
Current Tax 13.00 0.14% - 0.00% 20.88 0.44%
Deferred Tax 3.22 0.04% 6.18 0.09% 8.32 0.18%
Earlier Tax - 0.00% - 0.00% - 0.00%
Net Profit after tax 505.07 5.56% 209.44 3.13% 48.42 1.02%

Revenue from Operations: Revenue from operations mainly consists of sale of goods which include our products namely, ASPIRON? and LUXOR?

Other Income: Other income includes interest income, foreign exchange difference gain, sundry balance written off, Other non-operating income and MAT credit.

Total Income: Our total income comprises of revenue from operations and other income.

Total Expenses: Companys total expenses consist of cost of material consumed, Purchase of Traded Goods, change in inventories of stock in trade, employee benefit expenses, finance costs, depreciation and amortization expenses and other expenses.

Other Expenses: Other expenses primarily consist of business promotion expenses, audit fees, insurance, office expenses, pre-operative expenses written off, professional fees, rent rates and taxes and travelling expenses.

Employee Benefits Expense: Employee benefit expense includes salaries and wages, contribution to provident and other fund, staff welfare expenses and director remuneration.

Finance Cost: Finance cost includes interest on borrowings, bank charges, other interest and processing fees.

Depreciation: The Depreciation is calculated based on Written Down Value method.

COMPARISON OF F.Y. 2024 WITH F.Y. 2023:

Revenue from Operations

The Companys total revenue for the financial year 2023-24 is 9,076.42 lakhs. This represents a 36.00% increase compared to the previous financial years total revenue of 6,673.83 lakhs. This increase is due to an increased volume of goods sold accompanied by increase in average rate of per unit sold.

Other Income

In the financial year 2023-24, the Other Income recorded a decrease of 27.58%, amounting to 7.51 lakhs, as compared to 10.37 lakhs in financial year 2022-23. This decrease in other income due to the decrease in interest income by 0.99 lakh.

Total Expenses

The total expenses for the financial year 2023-24, were 8,562.65 lakhs, while the total expenses for the financial year 2022-23, were 6,468.58 lakhs. This indicates an increase in total expenses of 2,094.06 lakhs, or approximately 32.37%. The increase is on account of increase in cost of materials consumed, employee benefit expenses, finance cost, and other expenses.

Cost of materials consumed

The cost of material consumed increased from 5,745.46 lakhs in financial year 2022-23 to 7,447.64 lakhs in financial year 2023-24. This represents an increase of approximately 1,702.18 lakhs or 29.63% which is due to increase in production of solid surface sheet from 1,07,000 units in financial year 2022-23 to 1,72,724 units in financial year 2023-24.

Employee Benefits Expenses

The Employee benefit expenses increase by 8.19% to 169.79 lakhs in the Financial Year 2023-24 against that of 156.94 lakhs in Financial Year 2022-23. The increase in employee expenses was on account increase in salary and wages, and staff welfare expenses and decrease in contribution to Provident and other fund by 15.62 lakhs, 1.98 lakhs and 4.76 lakhs respectively.

Finance Cost

The Finance cost increase by 10.09% to 378.59 lakhs in the Financial Year 2023-24 against that of 343.88 lakhs in Financial Year 2022-23. The increase of the Finance Charges is on account increase in interest expenses, other interest and processing fees by 20.57 lakhs, 3.09 and 27.94 in the FY 2023-24 which was offset to some extent by decrease in bank charges by 16.90 lakhs.

Depreciation and Amortization Expenses

The Depreciation and Amortization expenses decrease by 21.39 lakhs which is equivalent to decrease of 9.20% to 211.16 lakhs in the financial year 2023-24 against that of 232.55 lakhs in financial year 2022-23. The decrease in depreciation was due to lower opening written down value of the assets.

Other Expenses

The Other expenses increase by 50.69% to 685.01 lakhs in the financial year 2023-24 against that of 454.59 lakhs in financial year 2022-23. The other expenses increase mainly on account of increase of Manufacturing Expenses by 104.08 lakhs, Business Promotion Expenses by 25.38 lakhs, Professional fees by 80.00 lakhs and Stamp Duty & Registration Charges by 25.22 lakhs and few other expenses.

EBDITA

The EBITDA for financial year 2023-24 was 1,073.78 lakhs as compared to 779.87 lakhs for financial year 2022-23. The EBITDA was 11.83% of total revenue in financial year 2023-24 as compared to 11.69% in financial year 2022-23. The EBITDA as percentage of total income increase in financial year 2023-24 compared to financial year 2022-23 on account increase in revenue from operation.

Profit after Tax (PAT)

PAT is 505.07 lakhs for the financial year 2023-24 in compared to 209.44 lakhs in financial year 2022-23. The PAT was 5.56% of total revenue in financial year 2023-24 compared to 3.14% of total revenue in F.Y. 2022-23. The profit is increased on account of increase in total revenue in FY 2023-24 as compared to financial year 2022-23 and the improvement in the above mentioned overheads indicating the efficiency through the operating leverage leading to increase in overall margins. In view of the above and our focus on serving large consumers and/or distributors leading to exponential increase in sales and net profit margins.

COMPARISON OF F.Y. 2023 WITH F.Y. 2022:

Income from Operations

The Companys total revenue for the financial year 2022-23 is 6,673.83 lakhs. This represents a 40.92% increase compared to the previous financial years total revenue of 4,735.82 lakhs. This increase is due to an increased volume of goods sold accompanied by increase in average rate of per unit sold.

Other Income

In the financial year 2022-23, the Other Income recorded an increase of 73.12%, amounting to 10.37 lakhs, as compared to 5.99 lakhs in financial year 2021-22. This increase in other income due to an increase in interest income, other non-operating income and sundry balance w/off by 2.51 lakh, 1.76 lakh and 0.12 lakh respectively.

Total Expenses

The total expenses for the financial year 2022-23, were 6,468.58 lakhs, while the total expenses for the financial year 2021-22, were 4,664.19 lakhs. This indicates an increase in total expenses of 1,804.40 lakhs, or approximately 38.69%. The increase is on account of increase in cost of materials consumed, employee benefit expenses, finance cost, and other expenses.

Cost of materials consumed

The cost of material consumed increased from 4,021.41 lakhs in financial year 2021-22 to 5,745.46 lakhs in financial year 2022-23. This represents an increase of approximately 1,724.05 lakhs or 42.87% which is due to increase in increase in production of solid surface sheet from 93,822 units in financial year 2021-22 to 1,07,000 units in financial year 2022-23.

Employee Benefits Expenses

The Employee benefit expenses increase by 71.35% to 156.94 lakhs in the Financial Year 2022-23 against that of 91.59 lakhs in Financial Year 2021-22. The increase in employee expenses was on account increase in salary and wages, contribution to provident fund, staff welfare expenses and director remuneration by 12.82 lakhs, 1.64 lakhs, 2.89 lakhs and 48 lakhs respectively.

Finance Cost

The Finance cost increase by 5.15% to 343.88 lakhs in the Financial Year 2022-23 against that of 327.03 lakhs in Financial Year 2021-22. The increase of the Finance Charges is on account increase in interest expenses and bank charges by 53.21 lakhs and 6.14 lakhs in the FY 2022-23 which was offset to some extent by decrease in other interest and processing fees by total of 42.50 lakhs.

Depreciation and Amortisation Expenses

The Depreciation and Amortisation expenses decrease by 32.68 lakhs to 232.55 lakhs in the financial year 2022-23 against that of 265.24 lakhs in financial year 2021-22. The decrease in depreciation was due to lower opening written down value of the assets.

Other Expenses

The Other expenses increase by 44.23% to 454.59 lakhs in the financial year 2022-23 against that of 315.18 lakhs in financial year 2021-22. The other expenses increase mainly on account of increase of Manufacturing

Expenses by 110.15 lakhs, Business Promotion Expenses by 11.18 lakhs and increase in Traveling Expenses by 26.13 lakhs and few other expenses.

EBDITA

The EBITDA for financial year 2022-23 was 779.87 lakhs as compared to 649.31 lakhs for financial year 2021-22. The EBITDA was 11.69% of total revenue in financial year 2022-23 as compared to 13.71% in financial year 2021-22. The EBITDA as percentage of total income decreased in financial year 2022-23 compared to financial year 2021-22 on account increase in finance cost in financial year 2022-23.

Profit after Tax (PAT)

PAT is 209.44 lakhs for the financial year 2022-23 in compared to 48.42 lakhs in financial year 2021-22. The PAT was 3.14% of total revenue in financial year 2022-23 compared to 1.02% of total revenue in F.Y. 2021-22. The profit is increased on account of decrease in total expenses as percentage of total revenue and due to decrease in total tax expense by 23.02 lakhs in FY 2022-23 as compared to financial year 2021-22 and the improvement in the above mentioned overheads indicating the efficiency through the operating leverage leading to increase in overall margins. In view of the above and our focus on serving large consumers and/or distributors leading to exponential increase in sales and net profit margins.

Cash Flow

The table below summaries our cash flows from our Restated Financial Information for the financial years ended on 2024, 2023 and 2022:

Particulars FY 2024 FY 2023 FY 2022
Net cash (used in)/ Generated from operating activities (1,660.47) 382.70 157.13
Net cash (used in)/ Generated from investing activities (383.14) (6.47) (46.65)
Net cash (used in)/ Generated from finance activities 2,051.84 (381.74) (105.78)
Net increase/ (decrease) in cash and cash equivalents 8.23 (5.51) 4.71
Cash and Cash Equivalents at the beginning of the period 3.97 9.48 4.77
Cash and Cash Equivalents at the end 12.20 3.97 9.48

Cash Flow from Operating Activities

For fiscal 2024, net cash utilized from operating activities was at 1,660.47 lakhs as compared to Profit Before Tax of 521.29 lakhs. The net cash from operating activities was after the adjustment of 211.16 lakhs for depreciation, 336.03 lakhs for interest expenses, decrease in working capital of 2,727.26 lakhs and direct tax paid of 1.68 lakhs. For fiscal 2023, net cash from operating activities was at 382.70 lakhs as compared to Profit Before Tax of 215.62 lakhs. The net cash from operating activities was after the adjustment of 232.55 lakhs for depreciation, 312.36 lakhs for interest expenses, decrease in working capital of 356.95 lakhs and direct tax paid of 20.88 lakhs. For fiscal 2022, net cash from operating activities was at 157.13 lakhs as compared to Profit Before Tax of 77.62 lakhs. The net cash from operating activities was after the adjustment of 265.24 lakhs for depreciation, 288.86 lakhs for interest expenses, decrease in working capital of 474.59 lakhs.

Cash Flow from Investing Activities

For fiscal 2024, net cash utilized in investing activities is 383.14 lakhs due to purchase of fixed assets of 311.32 lakhs, increase in fixed deposits of 24.30 lakhs and in non-current investment of 47.52 lakhs. For fiscal 2023, net cash utilized in investing activities was 6.47 lakhs due to purchase of fixed assets of 3.83 lakhs and increase in fixed deposits of 2.64 lakhs. For fiscal 2022, net cash utilised in investing activities was 46.65 lakhs due to purchase of fixed assets of 2.69 lakhs and increase in fixed deposits of 43.96 lakhs.

Cash Flow from Financing Activities

For fiscal 2024, net cash from financing activities is 2,051.84 lakhs due to payment of interest expenses of 336.03 lakhs this was offset by inflow from short term borrowings of 2,041.80 lakhs, from long term borrowing of 337.97 lakhs and from issue of share by 8.10 lakhs. For fiscal 2023, net cash utilised in financing activities was 381.74 lakhs due to payment of interest expenses of 312.36 lakhs, repayment of long-term borrowings 204.72 lakhs and repayment of short-term borrowings 34.17 lakhs this was offset to extent by cash inflow from issue of share by 169.50 lakhs. For fiscal 2022, net cash utilised in financing activities was 105.78 lakhs due to payment of interest expenses of 288.86 lakhs and repayment of long-term borrowings 681.53 lakhs this was offset by inflow from short term borrowings 864.62 lakhs.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

1. Unusual or infrequent events or transactions

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page 29 of this Red Herring Prospectus. To our knowledge, except as we have described in this Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Income and Sales on account of major product/main activities

Income and sales of our Company on account of major activities derives from sale of our products named ASPIRON? and LUXOR?

4. Whether the company has followed any unorthodox procedure for recording sales and revenues

Our Company has not followed any unorthodox procedure for recording sales and revenues.

5. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page 29 in this Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

6. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.

Increases in revenues are by and large linked to increases in volume of business.

7. Total turnover of each major industry services in which the issuer company operated.

The Company is in the business of, the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 103 of this Red Herring Prospectus.

8. Status of any publicly announced new products or business services.

Our Company has not announced any new product or business services.

9. The extent to which business is seasonal.

Our Companys business is not seasonal.

10. Any significant dependence on a single or few suppliers or customers.

Our Company is dependent on any single or few suppliers of customers.

Particulars March 31, 2024 FY 2022-23 FY 2021-22
Top 10 Customers 77.86% 71.24% 70.97%
Top 10 Suppliers 86.18% 84.30% 83.50%

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Our Business" beginning on pages 103 and 114, respectively of this Red Herring Prospectus.

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

Knowledge Center
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Capital Services Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Loading...

Follow us on

facebooktwitterrssyoutubeinstagramlinkedintelegram

2025, IIFL Capital Services Ltd. All Rights Reserved

ATTENTION INVESTORS

RISK DISCLOSURE ON DERIVATIVES

Copyright © IIFL Capital Services Limited (Formerly known as IIFL Securities Ltd). All rights Reserved.

IIFL Securities Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

ISO certification icon
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.