AN OVERVIEW:
The operating and financial review is intended to convey the Managements perspective
on the financial and operating performance of the Company at the end of Financial Year
2019-2020.
This report should be read in conjunction with the Companys financial statements, the
schedules and notes thereto and the other information included elsewhere in the Integrated
Report. The Companys financial statements have been prepared in compliance with the
requirements of the Companies Act, 2013, the guidelines issued by the Securities and
Exchange Board of India (SEBI).
This report is an integral part of the Directors Report. Aspects on industry structure
and developments, opportunities and threats, outlook, risks and concerns, internal control
systems and their adequacy, material developments in human resources and industrial
relations have been in the Directors Report.
INDIAN ECONOMY
The world has changed dramatically in the last few months. The COVID-19 pandemic and
subsequent lockdown that the world has seen, has put pressure on all economies. According
to the International Monetary Fund (IMF), while there is huge uncertainty about 2020
growth prospects, and even more so about the 2021 outlook, the impact of COVID-19 on the
world will across the board be severe and unprecedented. This is the lowest growth rate in
almost 60 years, including during the global financial crisis (4.7%) and the Asian
financial crisis (1.3%). The global economy is expected to contract in 2020 by 3% causing
the worst recession since the Great Depression. This is a synchronised contraction, a
sudden global shutdown.
During the first three quarters of FY 2020, the cyclical slowdown in the Indian economy
showed signs of a turnaround, on account of counter-cyclical measures announced by the
Government of India, along with the accommodative stance adopted by the Reserve Bank of
India (RBI). However, the emergence of the COVID-19 pandemic in March has cast a shadow on
these incipient signs, with the economy estimated to have grown at an 11-year low of 4.2%.
In addition to a phased nationwide shutdown, the Government of India has rolled out a
series of policy initiatives and broad-based stimulus to offset the economic impact to the
lockdown.
The fiscal support under the ‘AatmaNirbhar Bharat Abhiyan announced on May 12,
2020 intends to inject Rs.20.9 trillion into the economy, 10% of the nominal GDP of India.
These actions have served to reduce systemic stress and contributed to limiting the
amplification of the shock. However, the full impact of the outbreak cannot be ascertained
yet.
GBL Industries Limited is involved in the trading in Three Sectors namely:
1) Textiles
2) Steel (TMT Bars) and alliedProducts
3) Papers
Mainly Company trades Textiles and TMT Bars. In the recent years, steel industry has
seen significant volatility. It happened largely due to a sharp fall in demand, an outcome
of the global economic crisis and COVID-19 Pandemic. At present, the slow improving
macroeconomic environment may help revive the demand cycle for steel.
OPPORTUNITIES AND THREATS:
The per capita consumption of steel in India is very low in comparison to global
average as well as in comparison to various other Asian economies. Eventually India has a
long way to go in the consumption of steel, which as such, ensures long-term growth and
good prospects for the steel sector in long run.
Opportunities:
The renewed importance given by Government on affordable housing, roads, sagarmala
projects and other infrastructure projects are expected to create steel demand.
- With an accelerated push from the policies proposed by the Government regarding steel
intensive segments such as infrastructure, capital goods and construction, India is all
set to become the 2nd largest steel consumer in the World in the comingyears.
- High export potential to markets of Middle East and South EastAsia.
Threats:
- Dumping of steel from abroad and increased competition from domestic and
international steel companies located inIndia.
- Cheap sourcing of steel from countries with which India has Free Trade Agreement
(FTA).
SEGMENT WISE- PRODUCT WISEPERFORMANCE:
During the year under review Company is in Two Segment which is Steel (TMT Bars) and
allied Products and Textiles.
As per Accounting Standard AS- 17, during the year under review, the business of the
Company falls under three segments namely:-
• Steel (TMT Bars) and alliedProducts
• Textiles
• Papers
OUTLOOK:
Post elections and stable Government, it is expected that thrust on infrastructure
projects will renew. Also liquidity infusion and project finance will become easier and
spurt growth in housing and infrastructure sectors. This will lead to remunerative prices
and business sustainability.
The year ahead looks good for the Indian Textile Industry buoyed by both strong
domestic consumption as well as export demand. With consumerism, disposable income on the
rise and with the entry of several international players into the India markets, the
retail sector has experienced a rapid growth.
Analysts are upbeat over the expected above normal monsoon and higher GDP growth. The
slow pace of public and private sector projects is expected to improve with the Government
of Indias thrust on infrastructure projects. Further, Make in India initiative has got
a boost by a slew of measures aimed at improving the ease of doing business in the
Country. Small and medium industry- a major employment generator for the economy- has been
liberated to participate in the Nations development in accordance with its potential.
Bold measures by the Government such as improved targeting of subsidy, broadening of the
tax base and expected buoyancy in tax revenue are all aimed at achieving the fiscal
consolidation which had been an area of concern in the recent past.
RISKS AND CONCERNS:
Apart from the risk on account of interest rate and regulatory changes, business of the
company are exposed to certain operating business risks, which is mitigated by regular
monitoring and corrective actions.
INTERNAL CONTROL SYSTEMS:
The Company has implemented proper and adequate system of internal controls
commensurate with its size and nature of operations to provide reasonable assurance that
all assets are safeguarded, transactions are authorised, recorded and reported properly,
applicable statutes and corporate policies are duly complied with.
The Company has an Audit Committee with Independent Directors as members. The mechanism
of internal control and checks are reviewed by the management, internal and statutory
auditors from time to time and suitable changes/ modifications are implemented so as to
ensure that an effective scheme of checks and balances exists at all times. The management
is reasonably satisfied with the existing internal control systems. The Audit Committee of
Board of Directors also reviews these matters from time to time in their meetings.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONS:
|
|
(Rs. In Lakh) |
| Particulars |
For the year ended 31st March, 2020 |
For the year ended 31st March, 2019 |
| Income from Operations |
0 |
2521.29 |
| EBITDA (Before exceptional items) |
-13.49 |
26.18 |
| Profit/(Loss) after tax |
-13.67 |
28.13 |
| Basic & Diluted Earnings per Share (EPS) |
-0.27 |
0.56 |
During the year under review, revenue from operations decreased to nil (previous year
Rs. 2521.29 lakh). However, EBIDTA decreased to Rs.-13.49 lakh (previous year Rs. 26.18
lakh) and profit after tax decreased to Rs.-13.67 lakh (previous year Rs. 28.13 lakh) on
account of market conditions.
INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT:
The Company firmly believes that motivated and empowered employees are the cornerstone
of competitive advantage. The Companys employee value proposition is based on a strong
focus on employee development, providing a satisfying work environment, performance
appraisal and counseling and appropriate empowerment. The Company continues to maintain
and enjoy a cordial relationship with its employees, providing positive environment to
improve efficiency with regular investments in upgrading the knowledge and skills of
theemployees.
Industrial relations with staff and workmen during the year under review continued to
be cordial.
DETAILS OF SIGNIFICANT CHANGES:
KEY FINANCIAL RATIOS:
| Ratios |
2019-2020 |
2018-2019 |
| Debtors Turnover 1 |
0.00 |
16.39 |
| Current Ratio 2 |
3.19 |
8.53 |
| Debt Equity Ratio 3 |
0.16 |
0.003 |
| Operating Profit Margin 4 |
0.00 |
1.67 |
| Net Profit Margin 5 |
0.00 |
1.116 |
| Return on Net Worth 6 |
-0.03 |
5 |
Notes:
1. Debtors turnover has decreased due to decrease in frequency ofreceivables.
2. Current ratio is impacted due to increase in current maturity of long-termborrowing.
3. Increase in debt equity ratio has deteriorated the position ofCompany.
4. The Company has increased its efficiency by controlling the costs and expenses
associated with businessoperations.
5. The Net profit Margin decrease due to decrease in thebusiness.
6. Lower Return on Net worth is due to decrease in profit in currentyear.
DISCLOSURE OF ACCOUNTING TREATMENT:
The Company has followed all the treatments in the Financial Statements as per the
prescribed Accounting Standards.
CAUTIONARY STATEMENT:
Certain statements in the Management Discussion and Analysis Report describing the
Companys objective and predictions may be "forward-looking statements" within
the meaning of applicable laws and regulations. Actual results may vary significantly from
the forward looking statements contained in this document due to various risks and
uncertainties. These risks and uncertainties include the effect of economic and political
conditions in India, volatility in interest rates new regulations and government policies
that may impact the Companys business as well as its ability to implement the strategy.
The Company doesnt undertake to update thestatements.
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