International Conveyors Ltd Management Discussions

This Management Discussion and Analysis report presents the key performance highlights of the Financial Year 2023-24 pertaining to your Companys business. This review should be read in conjunction with the report presented in the other sections i.e. financial statements, the schedules and notes thereto and other information included elsewhere in this Annual Report. Your Companys financial statements have been prepared in accordance with Indian Accounting Standards (IndAS), complying with the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

INDUSTRY STRUCTURE & SCENARIO

Before the advancement of technology, labour was used to transport material and goods from one point to another. People were responsible for carrying these products from one place to another using some kind of mobile transportation devices. This method of transportation was susceptible to a number of risks namely deterioration of products, miss handling, risk to life and many more not to mention the inefficiencies and total cost of ownership.

With the developing technology, new and better ways of transportation of goods were developed. Among these new techniques, Conveyor Belting is the most cost-effective and efficient method of carrying goods and materials from one point to another and it is mostly used for conveying a large volume of materials continuously in a short span of time. The efficiency of Conveyor Belting assists in improving productivity, saves cost and decreases lead time. The high versatility, light weight nature and cost-effectiveness have made Conveyor Belting highly popular across various industries such as manufacturing, mining, agriculture, and logistics etc. Over the time, Conveyor Belting has also improved leveraging technological advancements to offer more energy efficient and longer lasting belts thus reducing the cost per tonne of transportation.

The advantages of Conveyor Belting are manifold, such as it enables continuous and consistent material flow, allow for precise control of speed and direction and can handle heavy loads with ease. In comparison to alternative transportation methods, such as manual handling or forklifts, Conveyor Belting is more efficient and require lower operational costs. Conveyor Belting is built in such a manner that it can move loads of materials of all weights, sizes and shapes.

Growing demand from the power, mining, cement, coal, potash and manufacturing industries represent one of the key factors driving the Conveyor Belting market, out of which the mining segment is anticipated to garner the highest share in the market in near future.

INDUSTRY OVERVIEW IN INDIA

The Indian Conveyor Belting market is witnessing significant growth and is projected to grow from USD 2,009.07 million in 2023 to an estimated USD 3,382.95 million by 2032, with a compound annual growth rate (CAGR) of 5.91% from 2024 to 2032. The Indian Governments efforts, such as the construction of 100 smart cities and metro projects will drive the demand for cement in future. Cement industry has huge potential in the Country and estimated to grow at a CAGR of 12% by 2025. As a result, the demand for Conveyor Belting will outgrow in cement industry. Moreover, Government of Indias (GoI) Make in India campaign is encouraging domestic production, which is creating a favourable environment for Conveyor Belting manufacturers.

The growth of mining industry in India will continue to boost the demand for Conveyor Belting, which is essential for efficient material handling and transportation. Continuous investments in the mining sector provides the long runway for growth of Conveyor Belting industry going forward.

With the governments drive to award MDOs we see significant growth in the mining sector which would start yielding results in the coming years.

Material handling system is going to be more in use in application for continuous production in the field of bulk capacity handling like coal, ores, potash etc. Being one of the worlds fastest-growing economies, India is an attractive market for Conveyor Belting manufacturers.

INDUSTRY OVERVIEW GLOBALLY

The coal and potash industries in Canada and USA have been on a downturn in the recent years with stocks piling up and prices reducing to the extent of 30-40%. The mining industry being cyclical in nature, we expect things to change for the better starting from Financial Year 2024-25 as large players like BHP are making significant investments, in excess of 10 Billion USD.

BUSINESS OVERVIEW

Your Company is engaged in the manufacturing and marketing of solid woven fabric reinforced PVC impregnated and PVC covered fire retardant, anti-static Conveyor Belting in India since 1978 having a rich and valuable experience of around 45 years guided by core human values. It has complete integrated in-house manufacturing from yarn preparation, fabric weaving, compound mixing to finishing and it ensures quality control at each step of manufacturing activity.

The primary product of your Company is PVC Fire Resistant Antistatic Solid Woven Conveyor Belting. Your Company has achieved an annual production of 3,00,812 meters in Financial Year 2023-24. Your Company is one of the largest manufacturers of solid woven belting in the world and has a complete product range with the ability to make Conveyor Belting up to 3150 kN/m (type 18) in strength and belting widths ranging from 600 mm to 1800mm. This is the widest product range of Solid Woven Belting available from any one Company with a manufacturing capacity of 1 million meters per annum of PVC Solid Woven Conveyor Belting. Your Company has plants at Aurangabad, Maharashtra and Falta SEZ, West Bengal. Aurangabad Plant has total annual installed capacity of 7,00,000 meters and Falta SEZ Plant has total annual installed capacity of 4,25,000 meters. Your Company has fully-integrated plants with comprehensive equipped laboratory at both the locations at Aurangabad and Falta SEZ.

Your Companys design team can undertake full in-house design starting from preliminary design of systems from power and tensile strength/tension calculations all the way through to detailed design. It has years of experience in solid woven conveyor belting both for underground and above ground applications. Your Company is the first Company to have BIS Certification. It provides products of International quality, superior technology and testing capability.

Your Company has twisting and doubling machines, which is capable of handling upto 20 tons of yarn at a time. It also has one of the widest and heaviest beaming machines in the world with a 2400 mm beam width and carcass making machine capable of handling upto 22 tons of beamed yarn in a single load.

Your Company is also associated with Mato Industries Ltd., UK as their distributor in India for Mato Belt Lacing Machine, Fasteners, Spindle Pins and Belt Cutter etc., for last 3 decades. Your Company has achieved substantial growth rate in sale of Mato Products in India. It expects substantial growth of the ongoing business in coming years.

Your Company has been involved in numerous supply arrangements for Indian Coal Mines and also involved in export contract arrangements with Canadian customers in their potash mining applications. Your Company supports its customers for selecting belting based on Conveyor structure (sidewinder software) and it is pioneer in use of PVC belting in cement industries.

In order to be ahead in the curve when the industry consumption increases globally, your company has undertaken various research and development projects to increase the product range which would increase your companys market share, while contributing to the industry efficiencies.

STRENGTHS

? Experienced Promoters and Management Team

The Promoters of your Company have rich and vast experience in Conveyor Belting industry and are well assisted by an experienced and competent team. Your Company is managed by a team of competent professionals with deep knowledge of the core aspects of the business.

? High entry barriers

There are barriers for entering in the Conveyor Belting market as dual stage approval is required to be an approved supplier. Product approval by regulatory authorities of importing countries is also required and these approvals are specific to importing entities. As there are very few manufacturers of the product globally, your Company is able to grab a large market share of a niche industry.

? Long Term Relationship with the Clients

Your Company believes in maintaining long term relationships with the clients. Your Companys long term contracts ranging between 5-7 years with customers. Your Companys dedicated focus on client coverage and its ability to manufacture as per Countrys and Customers specification has helped to establish long term relationships. It has reputed clients in International and Domestic Market.

? Advantageous Policies and Regulations

There are several policies and regulations which gives advantage to the Conveyor Belting industry. For example, National Mineral Policy, 2019 provides for encouragement of merger and acquisition of mining entities, creates dedicated mineral corridors to boost private sector mining, encouraging technology for mineral administration and curb illegal mining, introduction of appropriate incentive for exploration, creation of dedicated mineral corridors to boost private sector mining. Further, Government has relaxed the FDI norms such as FDI of 100% is permitted under the Automatic Route and Government allowed 100% FDI in commercial coal mining to introduce private sector participation.

? Talented and Competent Employees

Your Company has skilled and professionally competent employees and technical team who contribute for the success and growth of your Company. It has highly skilled team with an average on-the-job experience exceeding 20 years.

? Strong research and Development

With a customer centric ethos, your company has over the years built a strong research and development framework with a focus on reduction of cost of ownership of its customers and is now using that structure to innovate new products so as to increase its offering on its customers.

? Financial Performance

During the year under review, your Company has achieved a turnover of 13,821.92 lacs as compared to 20,835.58 lacs in the previous year, signifies a reduction of 33.66% than the previous Financial Year. Your Companys profit before taxation for the Financial Year 2023-24 stood at 7,663.33 lacs as compared to 3,748.37 lacs in the previous year and has grown by 104.44% over the year.

OPPORTUNITIES Conveyor Belting

Your Company deploys wide ranging engineering capabilities to complete manufacturing of products on schedule realizing that our products derive our customers business ahead. Your Company has complete in house manufacturing - from yarn preparation, fabric weaving, compound mixing to finishing - to ensure total process and quality control at each step of manufacturing activity.

The product your Company manufactures is an ingenious way to increase productivity in industries and to reduce cost. There are ample of opportunities available with the growing demand of Conveyor Belting in cement and mining industry. Your Company is an ISO 9001:2015 certified Company meeting International quality benchmarks and enjoys several certifications and endorsements from stringent global regulatory bodies, which enables it to grab the international as well as domestic market.

Treasury

In world economy, India continues to shine as a bright spot. It is the fifth-largest economy in the world and is poised to retain its position as the worlds fastest-growing major economy. Its GDP growth remained buoyant at 7.3% in FY 2023-24 as against 7.2% in FY 2022- 23, which was supported by robust domestic demand, moderate inflation, a stable interest rate environment, and strong foreign exchange reserves. The International Monetary Fund (IMF) commended Indias economic resilience, robust growth, and notable progress in formalization and digital infrastructure.

The Indian stock market delivered an exceptional year. The Nifty50 spiked up an impressive 28.6% in FY 2023-24, outperforming most major market indices globally. The broader market recorded a much higher return with overall market cap of all listed companies appreciating 47.91%.

Equity markets are expected to offer high returns in the long run, supported by improving global and domestic landscapes. Your Companys outlook remains optimistic, grounded in factors such as softened inflation, early adjustments in monetary policy rates, and reduced crude oil prices. Your Company invests after considering both global and domestic macro-economic conditions.

Your Company is looking forward for a sustainable growth of its investee Companies in the coming years which would result in your Companys capital appreciation and enhancing income from dividends.

RISK AND CHALLENGES

Conveyor Belting

? Foreign Currency Exchange Rate Fluctuations

Your Company imports critical raw material and payment of these purchases is made in foreign currency. International Market is a much bigger market in comparison to Domestic Market resulting in export of your Companys products outside India. Changes in value of currencies with respect to Indian Rupee may cause fluctuations in your Companys operating results expressed in rupees. The exchange rate between the rupee and other currencies is variable and may continue to fluctuate in future. Any unforeseen or adverse fluctuations with respect to the unhedged exchange rate of any Foreign Currency for Indian Rupees may affect your Companys Results of operations.

? Regulatory Risk

Changes in the Regulatory Environment, while usually beneficial to the progress of the sector in the long term, could sometimes cause short term disruptions. Stringent corporate governance regulations and public disclosure requirements have enhanced the need for compliances. Compliance risk is caused by failure in compliance with various domestic and overseas rules and regulations. Non-compliance may lead to penalties and loss of reputation.

? Political Differences

As your Company exports its product outside India, any political differences between India and the Countries in which the product is being exported can lead to disruption in demand of Conveyor Belting. Revision in import/export regulation or political events such as trade wars can be detrimental for exporting your Companys product outside India. These events are largely out of hands and can be fairly unpredictable.

? Change in Policies due to Change in Ruling Dispensation

Policy changes about usage of product due to change in ruling dispensation and their mindset for abrupt policy change may cause loss of business to the Company.

However, your Company has various due diligence systems in place to mitigate the impact of the risks mentioned above and to ensure transparency and accountability in the day to day business activities.

Treasury

Your Company is exposed to various risk such as financial risk, political risk, fidelity risk, legal risk, liquidity risk and operational risk. Your Company has quoted investment which are exposed to fluctuations in stock market. Any decline in these quoted investments will have an impact on your Companys financial position. Any slowdown in the growth of the Indian economy or future volatility in the global financial market, could also affect the financial position of your Company.

Negative economic developments, such as rising fiscal or trade deficits, or a default on national debt, in other emerging countries may also affect investor confidence and cause increased volatility in Indian securities markets and indirectly affect the Indian economy in general, consequently performance of your Company may be impacted. Any adverse changes in liberalization policies, social disturbances, religious or communal tensions, terrorist attacks and other acts of violence or war, natural calamities, interest rates etc. may affect Indian economy as well as your Company.

However, your company puts continuous effort to frequently examine the ups and downs of the market. As your Company has been fundamentally built on the principle of sound risk management practices, it has successfully weathered the market turbulence and continues to remain resilient. The Audit Committee of your Company reviews the probable risk that may affect the financial position of your Company from time to time.

SEGMENT-WISE AND PRODUCT-WISE PERFORMANCE

The segment-wise and product-wise performance of your Company is given below:

a. Conveyor Belting

Your Company is mainly engaged in the manufacturing of Conveyor Belting. The revenue generated from this segment during the Financial Year 2023-24 comprises of 93.73% of the total revenue of your Company. The revenue generated from Conveyor Belting segment during the financial year 2023-24 is 12,956 lacs as compared to 19,822 lacs in the previous financial year, which implies a decline of 34.64% than previous year. Revenue from this segment has been decreased due to lack of export orders. The Profit before Interest and Tax from Conveyor Belting segment is 2,869 lacs for the year ended March 31, 2024 as compared to 3,408 lacs for the year ended March 31, 2023 and has decreased by 15.82%. The Profit before Interest and Tax has decreased less as compared to decrease in revenue, due to better margin.

b. Wind Energy

Your Company presently has in total 5 Wind Mills. All these Wind Mills are generating green energy in the states of Karnataka, Maharashtra, Gujarat and Andhra Pradesh and the same is supplied to respective state consumers through state grids. The revenue generated from Wind Energy during the financial year 2023-24 is 152 lacs as compared to 159 lacs in the previous financial year and reduced by 4.40% over the year. Revenue from this segment has been decreased due to low wind velocity. The Profit before Interest and Tax from Wind Energy segment is 6 lacs for the financial year ended March 31, 2024 as compared to 44 lacs for the financial year ended March 31, 2023 and has reduced by 86.36%. Profit before Interest and Tax has declined significantly as a new ABT meter has been installed at Andhra Pradesh resulting in increase in operation and maintenance cost.

c. Trading of Goods

Your Company is engaged in trading of fasteners. During the financial year 2023-24, the revenue generated from trading of goods is 691 lacs as compared to 803 lacs in the previous financial year and has decreased by 13.95% over the year. The revenue generated from this segment has been decreased due to lack of export orders. The Profit before Interest and Tax for the year ended March 31, 2024 is 124 lacs as compared to 197 lacs and has decreased by 37.06% over the year. Profit before Interest and Tax has decreased due to lower revenue recorded during the year.

d. Treasury

The Treasury segment comprises of investment in equity instruments, mutual funds and inter-corporate deposits given by your Company and the total assets under this segment as on March 31, 2024 stood at 35,989 lacs as compared to 22,554 lacs in the previous financial year and has grown by 59.57% over the year. The Profit before Tax from the treasury segment is 5,661 lacs for the financial year ended March 31, 2024 as compared to 927 lacs in the previous financial year and has grown by 510.68% over the year. Further, the treasury segment contributes to 73.87% of the Profit before Tax of the Company.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

A separate paragraph on internal financial control systems and their adequacy has been provided in the Directors Report.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONGWITH EXPLANATION

In compliance with the requirement of the Listing Regulations, the key financial ratios of your Company alongwith explanation for significant changes (i.e., for change of 25% or more as compared to the immediately previous financial year) has been provided hereunder:

Sl. No. Particulars	2023-24	2022-23
01 Debtors Turnover	6.00	9.54
02 Inventory Turnover	6.78	8.04
03 Interest Coverage Ratio	9.23	9.63
04 Current Ratio	2.18	1.94
05 Debt Equity Ratio	0.45	0.30
06 Operating Profit Margin (%)	15.58	14.60
07 Net Profit Margin (%)	30.36	13.22
08 Return on Net-worth (%)	23.14	12.77

Debtors turnover ratio has been decreased by 37.11% due to decrease in sales over the year.

Debt Equity Ratio has been increased by 50% over the year due to increase in borrowings for the purpose of purchase of Current Investment and decrease in Other Equity on account of Buyback of shares during the Financial Year under review.

There have been no significant changes in the ratios over previous year except as provided above. For detailed explanation, please refer to Note no. 38 (14) of the Notes to Standalone Financial Statements for the year ended March 31, 2024.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

Your Company has been continuously working to enhance human resource skills, competencies and capabilities within the organization, which are critical to achieve desired results in line with the strategic business ambitions. Your Company strongly believes that to achieve continual success, a dedicated and devoted workforce is very much required to get high performance and improved productivity. Your Company has left no stones unturned for enhancing the capabilities of employees across all levels of the Organization through continuous learning and development programs.

The total employee strength as on March 31, 2024 stood at 94. Your Company is taking initiatives to maintain safety and welfare of employees such as:

a. Celebration of Yoga Day;

b. Annual Medical Checkup;

c. Celebration of Safety week;

d. Conducting Safety Mock Emergency Drill;

e. Conducting Monthly Safety Committee Meeting;

f. Conducting Safety Induction Training;

g. Celebration of Ganpati festival;

h. Celebration of Republic Day and Independence Day.

CAUTIONARY STATEMENT

Statements in this "Management Discussion and Analysis Report" describing your Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. The actual results may differ substantially or materially from those expressed or implied. The important factors that would make a difference to your Companys operations include demand-supply conditions, raw material prices, changes in Government Policies, Governing Laws, Tax regimes, Global Economic Developments and other factors such as litigation and labour negotiations.

	For and on behalf of the Board of Directors
	Udit Sethia	R. K. Dabriwala
	Director	Managing Director
	DIN : 08722143	DIN :00086658
Date : August 14, 2024	(Mumbai)	(Kolkata)