Keltech Energies Ltd Management Discussions

INDUSTRY OVERVIEW

The explosives industry includes manufacturing of various products like Cartridge Explosives, Bulk Emulsion Explosives, Mono Methyl Amine Nitrate (MMAN) solutions, accessories for explosives etc. The key raw material for manufacturing of explosives is Ammonium Nitrate. Whereas, perlite is an aerator in potting mix which speeds up the germination and rooting, improves aeration, draining & insulation in Potting Mixes and improves the texture of clay soils. Different types of Perlite products are used in plantation, garment industry, manufacture of refractories, concrete blocks etc.

SEGMENT-WISE PERFORMANCE

1. Explosives Division: Our Companys focus was to enhance exports in various Explosive products. This resulted in growth of Accessories. Our continued presence in PSUs like SCCL has contributed to the volume of Bulk Explosives. Details has been mentioned in the Boards Report. The Company is planning to set-up Accessories Project at its existing Unit i.e. Garamsur and the same will be operational during the FY 2025-26.

2. Perlite Division: Perlite Filter aid diversification into new areas of market is underway. Focus is continued in the pharma sector to get higher volumes. Horticulture Mixes and Perlite have seen a considerable growth in the market. Crop specific products are being developed to support the tissue culture industry. Your company has executed various insulation projects and catering to Indias growth in the cryogenic market.

STRENGTHS

The quality function at KEL has been at the forefront of enabling delivery and support functions in differentiation, optimization, and de-risking. While we continue to comply with international standards, such as ISO 9001, 14001 & 45001 Company, our quality and engineering departments have driven change initiatives for productivity improvements.The Company has improved the overall infrastructure at Vishwasnagar, Garamsur and other Units.

RISKS AND CONCERNS

Just like any other Industry, our Company also faces some risks like shortage in skilled labours, competition in the domestic and local markets, and stringent government regulations with respect to license and safety. Your Company is in continued efforts to evaluate and assess potentials risks and threats impacting the business. Further, your Company has identified manufacturing risks at its various manufacturing locations and took appropriate measures to minimize the same. Also, your Company has approached eminent experts to identify market risks and take pro-active actions.

OPPORTUNITIES & CHALLENGES

Research and Development (R&D) efforts are continued to develop new products specific to customer needs by maintaining quality and consistency of the products. Safety has been the primary focus on all production activities. Your company has from time to time strengthened the processes to enhance safety. More focus is made on trainings, skill development of employees to further enhance safety. Various Government Initiatives and Investment in manufacturing and infrastructure sectors will be crucial for the increasing demand in Indias Explosive Industry.

OUTLOOK

The explosives industry is poised for substantial growth with steady increasing demand and Government investments in it. The major growth drivers include sectors like mining, construction and infrastructure.During the Financial Year 2024-25, your Companys focus is majorly into exports. New product range of accessories shall be added in our portfolio. Further, construction activities will commence in this Financial Year. More expansion initiatives shall be carried out to increase the existing capacities to grow with the market. These steps shall ensure continued growth of your Company in the long run. The performance of infrastructure development is crucial to our continued growth and development.

INTERNAL CONTROL SYSTEMS & ADEQUACIES

The Company has proper and adequate system of internal control to ensure that all assets are safeguardedand protected against loss from unauthorized use on disposition and transactions are authorized, recorded and reported correctly. Internal control systems are supplemented by InternalAudit Reviews, coupled with guidelines and procedures updated from time to time by the Management. Internal control systems are established to ensure that the financial and other records are reliable for preparing financial statements.Internal Audit System is engaged in evaluation of internal control systems. Internal audit findings and recommendations are reviewed by the Management and Audit Committee of the Board of Directors.

HUMAN RESOURCES

As on 31st March 2024, the employees strength (on permanent roll) of the Company was 262.

FINANCIAL STATEMENT ANALYSIS

In accordance with SEBI (Listing Obligation and Disclosure Requirements) (Amendment) Regulations, 2015, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios.

The Company has identified the following ratios as key financial ratios:

Ratios where there has been a significant change (25% or more) from year ended March 31, 2023 to year ended March 31, 2024.

1. Return on Equity Ratio : +34% - due to increase in margin

2. Inventory Turnover Ratio : -28% - due to decrease in cost of raw materials. 3. Trade Receivables Turnover Ratio: Not Applicable 4. Net Capital Turnover Ratio: -50% - due to decrease in value of sales. 5. Net Profit Ratio : +104% - due to increase in margin.

6. Debt Service Coverage Ratio : Not Applicable

THE DETAILS OF RETURN ON NET WORTH ARE GIVEN BELOW:

% of Change: +26% - due to higher profits.