Global Economy Outlook
The global economy is yet again at a highly uncertain moment, with the cumulative
effects of the past three years of adverse shocks, most notably, the COVID-19 pandemic and
Russias invasion of Ukraine, manifesting in unforeseen ways. The global economy is set to
slow substantially in 2023 with a pronounced decline in advanced economies. Tight global
financial conditions and subdued external demand are expected to weigh on growth across
emerging market and developing economies (EMDEs). As a result the baseline forecast is for
growth to fall from 3.4% in 2022 to 2.8% in 2023, before settling at 3.0% in 2024.
Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7%
in 2022 to 1.3% in 2023.
Industry outlook
Indias growth continues to be resilient despite some signs of moderation in growth.
The overall growth remains robust and is estimated to be 6.9% for the full year with real
GDP growing 7.7% year-on-year during the first three quarters of fiscal year 2022-23.
Inflation remained high, averaging around 6.7% in FY 2022-23. Indian Economy is expected
to become fastest growing economy in the FY 2023-24.
Our Company being one of leading manufacturer of Electrical Capital goods such as AC
Motors, Generators, DC Machines, Transformers and switchgears depends on the expansion,
fresh CAPEX investment and infrastructure projects for growth and to sustain the same.
With India poised to be fastest developing country we expect expansion and investments in
core sectors like steel, cement, coal, water, irrigation, hydro carbon, electric mobility,
renewable energy including the solar and banking in the country. Your Company caters its
products to all these sectors and this growth is expected to have its impact on the
increased demand for electric manufactured goods of the Company.
Your Company has taken several bold steps to remain competitive by optimizing the
costs, rationalizing manpower and consolidating the manufacturing operations. The Company
continues to enjoy strong brand image and acceptance of products and services on account
of our constant focus on Product reliability, durability and competitiveness.
The Company supplies to the core economic sectors such as power generation,
transmission and distribution, transportation, sugar, cement, renewable energy and many
key sectors. The Company is having manufacturing facilities across India with wide network
of Dealers, Sales offices across India and abroad having authorised service providers and
subsidiaries across India and abroad. Thus the Company has business operations spread
across and at multiple locations.
The Company is having a large network of spare parts dealers and service centres. This
enables the Company to provide premium products, exemplary systems and timely services at
competitive rates to the customers. Companys products are known for their high quality,
durability and reliability. The Company adheres to international standards by acquiring
and adopting latest technologies along with in-house R&D.
The Companys products are having good demand in domestic and overseas markets. As a
renowned Company, it provides elite products and strives to fulfil the expectations of
industries and clients spread across the world.
KECL is one of the leading Company in India which manufactures and supplies motors
which are used in electric vehicles. Companys EV motors have proven to be a resounding
success in the market, exceeding expectations and driving significant advancements in the
electric vehicle industry. With a relentless focus on innovation, efficiency, and
performance, KECLs motors have set new benchmarks for reliability, power, and
sustainability. Customers and industry experts alike have praised the exceptional
performance of KECLs our EV motors. The Companys valued customers includes Indian
Railways, all major industry houses including Tata, Reliance, Aditya Birla Group, Jindal
Group, GMR group, ESSAR, Mahindra & Mahindra and also leading PSUs such as BHEL, NTPC,
EIL, Nuclear power, NHPC, BPCL, HPCL, IOC and many more and EPCS including L& T, NCC,
Doosan and many more.
Opportunities
Your Company is one of the foremost manufacturers of Motors for Electric vehicles.
India is well poised to register multifold growth in electric mobility space. As per
various surveys, the number of electrical vehicles on road will grow from 3 million to 125
million by 2030. Huge growth is expected for electrical vehicles in India which will see
increase in demand for Motors. Further we see a sustained growth for all energy efficient
products including Motors, Transformers etc.,
Threats
The key sectors and end user Industry are going through a very rough business phase
more particularly mining, steel, coal and infrastructure including the real-estate
industry. Russias invasion of Ukraine and the ongoing war caused severe commodity and
energy price shocks and trade disruptions, provoking the beginning of a significant
reorientation and adjustment across many economies. Any change in the government policy
and projects guidelines concerning new investments in these sectors, may have an adverse
impact on demand for your products. Capacity utilization of the Company remains low and
actual performance may also vary as it is dependent on several factors beyond the control
of your Company.
Your Company continues to face competition from the unorganized sector and also new
players making their presence in the country. However, your company has a strong base for
its product in all sectors of the industries.
Segment wise or product wise performance
Your Company has identified the reportable segments as rotating machines group, power
generation and distribution group and others, taking into account the nature of products
and services, the different risks and returns and the internal reporting systems.
The segment wise turnover of your Company is as follows:
(Rs. in Lakhs)
Products |
2022-23 |
2021-22 |
Rotating Machines Group |
19,730 |
12,968 |
Power Generation and Distribution Group |
24,232 |
18,373 |
Others |
3,393 |
2,126 |
Total |
47,355 |
33,467 |
Note: figures has been regrouped as per IND-AS Future Outlook
Advanced economies are expected to see an especially pronounced growth slowdown, from
2.7% in 2022 to 1.3% in 2023. The outlook is uncertain again amid financial sector
turmoil, high inflation, ongoing effects of Russias invasion of Ukraine, and three years
of COVID. The RBI has stressed that future growth would be conditioned if the supply-side
bottlenecks are addressed, and monetary policy is calibrated accordingly to bring down
inflation and boost capital spending. The crisis also elevated inflation across the globe
as the price of metals, crude oil, and fertilisers skyrocketed.
Risks mitigation measures
Your Company recognizes the unstable growth in core sectors as major risks and has
initiated the following measures for mitigating the above business related risks.
Your Company continually upgrades its engineering strength and design capabilities by
incorporating latest technologies in its products and services. Reduction in manufacturing
costs and improvement in operating efficiencies are continuously pursued enabling it to
offer competitive prices. The wide portfolio of products gives your Company a competitive
advantage, as we can cater to the major verticals of the electrical engineering capital
goods industry.
Your Company recognizes the importance of its supply chain in sourcing good quality raw
materials and other inputs at competitive prices with high reliability in meeting delivery
timelines.
Internal Control System and their adequacy
Your Company has systems and internal audits in place to have controls on all
processes. System driven controls also ensure ease of monitoring and consistency of
operations and Compliances. Your Company is under SAP ERP which ensures that there is
reasonable assurance about the financial and accounting records and controls. To safeguard
assets of the Company against damage/loss and accounting records are reliable for
preparing financial statement the records are verified by Internal Auditors. Internal
controls are evaluated by the internal auditors and supported by management reviews. All
audit observations and follow up actions thereon are initiated for resolution by the
respective functions.
Discussion on financial performance with respect to operational performance:-
(Rs. In Lakhs)
PARTICULARS |
For the financial year ended March 31, 2023 |
For the financial year ended March 31, 2022 |
Revenue from operations |
47,355 |
33,467 |
Other income (Net) |
1,608 |
10,772 |
Total Income |
48,963 |
44,239 |
Total Expense |
46,374 |
38,423 |
Profit / (Loss) before exceptional items |
2,588 |
5,816 |
Exceptional Items |
- |
- |
Profit / (Loss) before tax |
2,588 |
5,816 |
Tax Expense |
0.16 |
- |
Profit / (Loss) after tax |
2,588 |
5,816 |
Total other comprehensive income |
(1,522) |
(2,491) |
Total comprehensive income for the period |
1,066 |
3,325 |
Note: The fnancial statements of the Company has been prepared in accordance with
Indian Accounting Standard.
Material developments in Human Resources / Industrial Relations front, including number
of people employed
During the period under review, all laid-off workmen were recalled for work. In total,
95 employees were appointed across all units and branch offices of the Company. The Mysore
Division Industrial Workers General Union had called for strike with regard to wage
revision and other related demands which commenced on May 25, 2022 & concluded on
August 31, 2022. The Company has intimated to the stock exchanges regarding the same.
Key financial ratios
Sl. No Particulars of financial ratios |
2022-23 |
2021-22 |
i. Debtors Turnover |
21 days |
25 days |
ii. Inventory Turnover |
38 days |
48 days |
iii. Interest Coverage Ratio |
0.10 |
0.26 |
iv. Current Ratio |
0.34 |
0.33 |
v. Debt Equity Ratio |
1.10 |
1.29 |
vi. Operating Profit Margin (%) |
11.03% |
27.54% |
vii. Net Profit Margin (%) |
5.47% |
17.38% |
viii. Sector-specific equivalent ratios, as applicable |
Nil |
Nil |
Detailed explanation of above ratios:
a. Debtors Turnover:
The above ratio is used to quantify a Companys effectiveness in collecting its
receivables or money owed by customers. The ratio shows how well a Company uses and
manages the credit it extends to customers and how quickly that short-term debt is
collected or is paid. It is calculated by dividing average debtors by turnover.
b. Inventory Turnover:
I nventory Turnover is the number of times a Company sells and replaces its inventory
during a period. It is calculated by dividing average inventory by turnover.
c. Interest Coverage Ratio:
The Interest Coverage Ratio measures how many times a Company can cover its current
interest payment with its available earnings. It is calculated by dividing PBIT by finance
cost.
d. Current Ratio
The Current Ratio is a liquidity ratio that measures a Companys ability to pay
short-term obligations or those due within one year. It is calculated by dividing the
current assets by current liabilities.
e. Debt Equity Ratio
The ratio is used to evaluate a Companys financial leverage. It is a measure of the
degree to which a Company is financing its operations through debt versus wholly owned
funds. It is calculated by dividing a Companys total liabilities by its shareholders
equity.
f. Operating Profit Margin
The operating profit margin is a profitability or performance ratio used to calculate
the percentage of profit a Company produces from its operations. It is calculated by
dividing the EBIT by turnover.
g. Net Profit Margin (%)
The net profit margin is equal to how much net income or profit is generated as a
percentage of revenue. It is calculated by dividing the profit for the year by turnover.
Details of any change in Return on Net worth (excluding revaluation reserves) as
compared to the immediately previous financial year along with a detailed explanation
thereof.
Sl. No |
Financial Year |
Net worth (Rs. In Lakhs) |
1. |
2022-23 |
(23,920.09) |
2. |
2021-22 |
(26,508.18) |
3. |
2020-21 |
(32,323.70) |
The net worth of the Company has been eroded and is negative from the preceding
financial years.
Disclosure of Accounting Treatment:
The financial statements of the Company has been prepared in accordance with IND-AS, as
prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto.
The detailed disclosure of accounting treatment is also provided in the notes to
financial statements which forms part of this annual report.
For and on behalf of the Board of Directors, Kirloskar Electric Company Limited
Place: Bengaluru |
Vijay R Kirloskar |
Date: 17.07.2023 |
Executive Chairman |
|
DIN:00031253 |
+91-9892691696
