You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Prospectus. You should also read the section entitled "Risk Factors" on page 21, which discusses a number of 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 financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the ICDR Regulations and restated as described in the report of our auditor dated May 31, 2024 which is included in this Draft Prospectus under "Financial Statements". The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve- month period ended March 31 of that year.
Significant Developments Subsequent to the Last Financial Period
In the opinion of the Board of Directors of our Company, since the date of the last financial statements disclosed in this Draft Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the business or 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:
Economic conditions in the markets in which we operate
Our results of operations are dependent on the overall economic conditions in the markets in which we operate, including India. Any change in macro-economic conditions in these markets, including changes in interest rates, government policies or taxation and political, economic or other developments could affect our business and results of operations. The iron and steel market in India may perform differently and be subject to market and regulatory developments that are dissimilar to the markets in other parts of the world. While stronger macro-economic conditions tend to result into higher demand for our products, weaker macro-economic conditions tend to result into lower demand. Change in demand in the market segments we currently supply or improvement/deterioration in the market or a change in regulations, customs, taxes or other trade barriers or restrictions could affect our operations and financial condition.
Regulatory developments
Our Company is regulated by the Companies Act and some of its activities are subject to supervision and regulation by statutory and regulatory authorities. It is therefore subject to changes in Indian law, as well as to changes in regulation and government policies and accounting principles.
Our investments in new manufacturing facilities may not be profitable and may be loss-making
In order to maintain a competitive position, we propose to invest in new manufacturing facility at Palghar. Our investments in new manufacturing facility, may be less profitable than what we have experienced historically, may be loss-making, may consume substantial financial resources and/or may divert managements attention from existing operations, all of which could materially and adversely affect our business, results of operations and financial condition.
Prices of raw materials
The key raw material used in our business have remained the same since the product categories remain the same. These materials are not exclusive to our business but are used across the industry as a part of our annual production planning 163
exercise and customer product pricing also adjusts accordingly. Therefore, any risk on the availability of these products is carried by the entire industry segment. There may be an unforeseen event wherein certain products may become scarce or outpriced.
RESULTS OF OPERATIONS
Description of the major components of revenue and expense items: -
Our total revenue consists of revenue from sale of Brass Wire & Products, Steel Wire & Products and Other ancillary Products and other income.
Revenue
Revenue from Operations
Our revenue from operations consists of revenue from sale of Brass Wire & Products, Steel Wire & Products and Other ancillary Products.
Other income.
Our Other Income mainly comprises of Interest Income on Fixed Deposits.
Expenses
Cost of Material consumed comprised of purchases of our products and changes in inventory of raw materials is the major expense head for our Company.
Changes in Inventory comprises of changes in inventory of WIP and Finished goods.
Employee Benefit expense includes, Directors Remunerations, salaries & wages, bonus, Employee Benefit expenses and staff welfare expenses.
Other expenses mainly include expenses towards Rent, electricity & fuel, factory expenses, Transport expenses, legal & professional fees, Commission, Loading & Unloading expenses, repairs and maintenance etc.
Depreciation and Amortization Expenses
Depreciation and Amortization Expenses comprised depreciation on tangible fixed assets. Tax Expense
Our tax expense or credit for the period represents the tax payable on the current periods taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.
OUR SIGNIFICANT ACCOUNTING POLICIES
For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under "Auditors Report and Financial Information of our Company" on page 101.
DISCUSSION ON RESULTS OF OPERATIONS:
The following discussion on results of operations should be read in conjunction with the audited financial results of our Company for the financial years ended March 31, 2024, 2023 and 2022.
164
Comparison of Financial Years ended March 31, 2024, 2023 and 2022
(? lakhs)
|
Particulars |
31.03.24 |
31.03.23 |
31.03.22 |
| Income | |||
| Revenue from Operations | 1,540.82 | 1,448.45 | 728.83 |
| Increase/Decrease (%) | 6.38% | 98.74% | |
| Other Income | 0.00 | 0.01 | 0.02 |
| Total Income | 1,540.82 | 1,448.46 | 728.85 |
| Increase/Decrease (%) | 6.38% | 98.73% | |
| Expenditure | |||
| Cost of Material Consumed | 1,252.88 | 1,283.28 | 698.93 |
| Increase/Decrease (%) | -2.37% | 83.61% | |
| % to Total Income | 81.31% | 88.60% | 95.90% |
| Changes in Inventories | -13.87 | -65.62 | -59.95 |
| Increase/Decrease (%) | -78.86% | 9.46% | |
| % to Total Income | -0.90% | -4.53% | -8.23% |
| Employee Benefit Expenses | 47.83 | 54.76 | 37.46 |
| Increase/Decrease (%) | -12.66% | 46.17% | |
| % to Total Income | 3.10% | 3.78% | 5.14% |
| Other Expenses | 107.85 | 134.21 | 35.89 |
| Increase/Decrease (%) | -19.65% | 273.98% | |
| % to Total Income | 7.00% | 9.27% | 4.92% |
| Total Operating Expenditure | 1,394.68 | 1,406.64 | 712.33 |
| Increase/Decrease (%) | -0.85% | 97.47% | |
| % to Total Income | 90.52% | 97.11% | 97.73% |
| PBIDT | 146.14 | 41.82 | 16.52 |
| Increase/Decrease (%) | 249.42% | 153.24% | |
| % to Total Income | 9.48% | 2.89% | 2.27% |
| Depreciation and Amortization Expenses | 6.28 | 3.22 | 1.30 |
| Increase/Decrease (%) | 95.19% | 148.22% | |
| % to Total Income | 0.41% | 0.22% | 0.18% |
| Profit Before Interest and Tax | 139.86 | 38.60 | 15.22 |
| Increase/Decrease (%) | 262.28% | 153.66% | |
| % to Total Income | 9.08% | 2.67% | 2.09% |
| Financial Charges | 27.22 | 24.42 | 8.76 |
| Increase/Decrease (%) | 11.47% | 178.74% | |
| % to Total Income | 1.77% | 1.69% | 1.20% |
| Profit before Taxation | 112.64 | 14.19 | 6.46 |
| Increase/Decrease (%) | 694.04% | 119.65% | |
| % to Total Income | 7.31% | 0.98% | 0.89% |
| Total Tax Expenses | 29.65 | 3.75 | 1.73 |
| Increase/Decrease (%) | 690.13% | 117.29% | |
| % to Total Income | 1.92% | 0.26% | 0.24% |
| Profit After Tax but Before Extra ordinary Items | 82.98 | 10.43 | 4.73 |
| Increase/Decrease (%) | 695.44% | 120.51% | |
| % to Total Income | 5.39% | 0.72% | 0.65% |
| Total Adjustments for Extraordinary Items | 0.00 | 0.00 | 0.00 |
| Increase/Decrease (%) | 100.00% | NA | |
| % to Total Income | 0.00% | 0.00% | 0.00% |
| Profit After Tax after Extra ordinary Items | 82.98 | 10.43 | 4.73 |
| Increase/Decrease (%) | 695.44% | 120.51% | |
| % to Total Income | 5.39% | 0.72% | 0.65% |
Comparison of FY 2024 with FY 2023:
Revenue from operations & Other Income
The Revenue from operations for the FY 2024 is ? 1,540.82 lakhs as compared to ? 1,448.45 lakhs during the FY 2023 showing an increase of 6.38%. This overall increase in sales was mainly due to increase in sale of Brass Wire & Products, Steel Wire & Products during FY 2024 compared to FY 2023.
The revenue during FY 2024 comprises of Brass Wire & Products sales of ? 810.44 Lakhs against ? 764.06 Lakhs during FY 2023 showing an increase of 6.07% and Steel Wire & Products sales during FY 2024 was ? 695.02 Lakhs against ?
647.69 Lakhs during FY 2023 showing an increase of 7.31%.
Other Income for the FY 2024 and FY 2023 was ? Nil lakhs and ? 0.01 lakhs respectively, comprises of Interest on Fixed Deposits.
Hence the Total Income for the FY 2024 and FY 2023 was ? 1,540.82 lakhs and ? 1,448.46 lakhs respectively.
Expenditure:
Cost of Material consumed
Cost of Material consumed was ? 1,252.88 lakhs for FY 2024 and ? 1,283.28 lakhs for FY 2023. Cost of Material consumed alongwith Changes in Inventories given below when considered together, it shows an increase of 1.75% during FY 2024 due to increase in Revenue.
Changes in Inventories
Changes in Inventories have increased by ? 13.87 lakhs for FY 2024. This increase was divided in to increase in finished goods of ? 18.56 lakhs and decrease in work in progress of ? 4.69 lakhs for FY 2024.
Changes in Inventories have increased by ? 65.62 lakhs for FY 2023. This increase was divided in to increase in finished goods of ? 37.64 lakhs and increase in work in progress of ? 27.99 lakhs for FY 2023.
Employee Benefit Expenses
Employee Benefit Expenses decreased from ? 54.76 lakhs for the year ended March 31, 2023 to ? 47.83 lakhs for FY 2024 showing a decrease of 12.66%. This decrease was mainly due to decrease in staff salary, wages and bonus and staff welfare expenses due to cost cutting on employees and taking improved output from remaining employees. Employee Benefit Expenses stood at 3.10% and 3.78% of Total income for FY 2024 and FY 2023, respectively.
Other Expenses
Other Expenses decreased to ? 107.85 lakhs for FY 2024 from ? 134.21 lakhs for FY 2023 showing a decrease of 19.65%. Other Expenses was 7.00% of Total income during FY 2024 as against 9.27% during FY 2023 due to mainly reduction in Labour charges, Electricity & Fuel expenses, Rent, commission, repairs & maintenance, house-keeping expenses etc. on account of economies of scale and better of absorption of fixed overheads.
EBIDTA
EBIDTA increased from ? 41.82 lakhs for FY 2023 to ? 146.14 lakhs for FY 2024 due to reduction in cost of material consumed, employee expenses and other expenses as discussed above. During FY 2024, our Company recorded EBIDTA margin of 9.48% of the Total income as against 2.89% during FY 2023.
Depreciation
Depreciation on fixed assets was 0.41% of Total income during FY 2024 as compared to 0.22% during FY 2023. The total depreciation during FY 2024 was ? 6.28 lakhs and during FY 2023 it was ? 3.22 lakhs.
Interest and Financial Charges
Interest and Financial Charges increased from ? 24.42 lakhs for the year ended March 31, 2023 to ? 27.22 lakhs for FY 2024 showing a increase of 11.47%. This increase was mainly due to increase in interest on cash credit and unsecured loans and processing charges. Interest and Financial Charges stood at 1.69% and 1.77% of Total income for FY 2023 and FY 2024, respectively.
Profit after Tax and restatement adjustment (PAT)
PAT increased from ? 10.43 lakhs for the FY 2023 to ? 82.98 lakhs in FY 2024. This increase was mainly on account of increase in revenue from operations and reduction in cost of material consumed, employee expenses and other expenses as detailed above. During FY 2024, our Company recorded PAT margin of 5.39% as against 0.72% for FY 2023.
Comparison of FY 2023 with FY 2022:
Revenue from operations & Other Income
The Revenue from operations for the FY 2022 is ? 728.83 lakhs as compared to ? 1,448.45 lakhs during the FY 2023 showing an increase of 98.74% during FY 2023. This overall increase in sales was mainly due to increase in sale of Brass Wire & Products during FY 2023 compared to FY 2022.
The revenue during FY 2023 comprises of Brass Wire & Products sales of ? 764.06 Lakhs against ? 3.86 Lakhs during FY 2022 showing an increase of 19694.30% and Steel Wire & Products sales during FY 2023 was ? 647.69 Lakhs against ?
690.99 Lakhs during FY 2022 showing a decrease of 6.27%.
Other Income for the FY 2022 and FY 2023 was ? 0.02 lakhs and ? 0.01 lakhs respectively, comprises of Interest on Fixed Deposits.
Hence the Total Income for the FY 2022 and FY 2023 was ? 728.85 lakhs and ? 1,448.46 lakhs respectively.
Expenditure:
Cost of Material consumed
Cost of Material consumed was ? 698.93 lakhs for FY 2022 and ? 1,283.28 lakhs for FY 2023. This increase was mainly due to increase in sales.
Changes in Inventories
Changes in Inventories have increased by ? 65.62 lakhs for FY 2023. This increase was divided in to increase in finished goods of ? 37.64 lakhs and increase in work in progress of ? 27.99 lakhs for FY 2023.
Changes in Inventories have increased by ? 59.95 lakhs for FY 2022. This increase was divided in to increase in finished goods of ? 27.35 lakhs and increase in work in progress of ? 32.61 lakhs for FY 2022.
Employee Benefit Expenses
Employee Benefit Expenses increased to ? 54.76 lakhs for the year ended March 31, 2023 from ? 37.46 lakhs for FY 2022 showing an increase of 46.17%. This increase was mainly due to increase in staff salary, wages and bonus and Director remunerations. Employee Benefit Expenses stood at 5.14% and 3.78% of Total income for FY 2022 and FY 2023, respectively.
Other Expenses
Other Expenses increased from ? 35.89 lakhs for FY 2022 to ? 134.21 lakhs for FY 2023 showing an increase of 273.98%. Other Expenses was 4.92% of Total income during FY 2022 as against 9.27% during FY 2023 due to mainly increase in Labour charges, Electricity & Fuel expenses, Factory expenses, Rent, commission, repairs & maintenance, loading & unloading charges etc.
EBIDTA
EBIDTA increased to ? 41.82 lakhs for FY 2023 from ? 16.52 lakhs for FY 2022 due to reduction in cost of material consumed in percentage terms due to economies of scale and better absorption of fixed overheads. During FY 2022, our Company recorded EBIDTA margin of 2.27% of the Total income as against 2.89% during FY 2023.
Depreciation
Depreciation on fixed assets was 0.18% of Total income during FY 2022 as compared to 0.22% during FY 2023. The total depreciation during FY 2022 was ? 1.30 lakhs and during FY 2023 it was ? 3.22 lakhs.
Interest and Financial Charges
Interest and Financial Charges increased to ? 24.42 lakhs for the year ended March 31, 2023 from ? 8.76 lakhs for FY 2022 showing an increase of 178.74%. This increase was mainly due to increase in interest on Term loans and unsecured loans. Interest and Financial Charges stood at 1.69% and 1.20% of Total income for FY 2023 and FY 2022, respectively.
Profit after Tax and restatement adjustment (PAT)
PAT increased to ? 10.43 lakhs for the FY 2023 from ? 4.73 lakhs in FY 2022. This increase was mainly on account of increase in revenue from operations and reduction in cost of material consumed as detailed above. During FY 2022, our Company recorded PAT margin of 0.65% as against 0.72% for FY 2023.
Cash Flows
The following table sets forth certain information concerning our cash flows for the periods indicated:
(? in lakhs)
|
PARTICULARS |
31.03.24 |
31.03.23 |
31.03.22 |
| Net cash generated from operation | 0.79 | 34.32 | 21.21 |
| Net cash (used) in investing activities | -201.69 | -5.80 | -13.52 |
| Net cash generated/(used) in financing activities | 261.10 | -14.15 | -8.76 |
| Net Increase / ( Decrease ) in cash and cash equivalents | 60.21 | 14.37 | -1.07 |
| Cash and cash equivalents at the beginning of the year | 15.30 | 0.93 | 2.00 |
| Cash and cash equivalents at the end of the year | 75.50 | 15.30 | 0.93 |
FACTORS THAT MAY AFFECT THE RESULTS OF THE OPERATIONS:
An outbreak of COVID-19 was recognised as a pandemic by the WHO on March 11, 2020. In response to the COVID-19 outbreak, the governments of many countries, including India, have taken preventive or protective actions such as imposing country-wide lockdowns, as well as restrictions on travel and business operations. Due to a government mandated lockdown in India, we had to shut down our operations and were operating on lower scale. We saw a decrease in our business during the period of lock down in Fiscal 2022 due to shortage of labour and other COVID-19 related restrictions and lower than normal demands during that period.
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 21 of the Draft Prospectus. To our knowledge, except as we have described in the Draft Prospectus, there are no known factors which we expect to bring about significant economic changes.
Apart from the risks as disclosed under Section titled "Risk Factors" on page 21 in the Draft 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.
Our Companys future costs and revenues will be determined by demand/supply situation, government policies and prices quoted by service providers.
169
Changes in revenues during the last three fiscal years are explained in "Managements Discussion and Analysis of Financial Condition & Results of Operations" under the subsection "Comparison of Financial Years ended March 31, 2024, 2023 and 2022" under the respective paragraphs titled "Operating Revenue".
For details on the industry related data please refer to "Industry Overview" on page 78.
Our Company has not announced any new product or business segment.
Our business is not seasonal in nature.
| Particulars | Financial Year ended | Financial Year ended | Financial Year ended |
| Customers contribution Top 10 (%) | 64.58% | 61.34% | 50.44% |
| Suppliers contribution Top 10 (%) | 75.01% | 79.89% | 73.94% |
Competitive conditions are as described under "Industry Overview" and "Our Business" on pages 78 and 90, respectively.
FINANCIAL INDEBTEDNESS
Following is a summary of our Companys outstanding borrowings as on March 31, 2024 as certified by M/s. Bohara Shah & Co, Chartered Accountants, our Statutory Auditors vide their Certificate (UDIN: 24163838BKESFP2264) dated June 04, 2024 is as under:
| Sr. No. | Nature of Borrowing | Amount (? in lakhs) |
| 1. | Secured Borrowings | 10.27 |
| 2. | Unsecured Borrowings | 213.63 |
| Total | 223.90 |
The details of loans are as under:
There are following secured borrowings as on March 31, 2024:
(? in Lakhs)
Particulars |
Sanctioned Amount |
Outstanding Amount |
Rate of Interest (p.a.) (%) |
Security |
Repayment |
| Kotak Mahindra Bank Limited – Term Loan |
12.31 |
10.27 |
9.75% |
Property: Gala No. 1, Jyoti Industrial Estate Vevoor, Village Ganesh Nagar, Palghar, East, Palghar, 401 404, Current Assets: Book Debts and Other Current Assets. |
Equated monthly instalments of Rs. 77,479/- up to 05th March 2025 and Last Equated monthly Instalment of Rs. 1,60,556/- |
| Total | 10.27 |
Unsecured Loans as on March 31, 2024: (? in Lakhs)
|
Particulars |
Outstanding as on 31.03.2024 |
Rate of Interest (p.a.) (%) |
Repayment |
| Rachit Paresh Masalia | 74.11 | 12.00% | On Demand |
| Darshil Hasmukh Shah | 91.22 | 12.00% | On Demand |
| Bhabya Vasant Shah | 11.30 | 12.00% | On Demand |
| Paresh Vasantlal Masalia HUF | 12.00 | 12.00% | On Demand |
| Vora Shares and Stock Broker LLP | 25.00 | 12.00% | On Demand |
| Total | 213.63 |
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