lakshmi electrical control systems ltd Management discussions

Economy Overview Global:

Global growth is projected at 2.9% in 2023 and expected to rise to 3.1% in 2024. The rise in central bank rates in respective countries to fight inflation and geo-political situations continue to weigh on economic activity. Global inflation is expected at 6.6% in 2023 and 4.3% in 2024. In most economies, amid the cost-of-living crisis, the priority remains in achieving sustained disinflation. The forecast of low growth in 2023 reflects the rise in central bank rates to fight inflationespecially in advanced economies and geo-political situations globally.

World trade growth is expected to decline in 2023 to 2.4%, despite an easing of supply bottlenecks, before rising to 3.4%in 2024. These forecasts are based on number of assumptions, including fuel and nonfuel commodity prices.

India Scenario:

India is expected to witness GDP growth of 6.0% to 6.8% in 2023-24, depending on economic and political developments globally. The optimistic growth forecasts stem from a number of positives like the rebound of private consumption given a boost to production activity, higher capital expenditure, near-universal vaccination coverage enabling people to spend on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, as well as the return of migrant workers to cities to work in construction sites leadingto significantdecline in housing market inventory, the strengthening of the balance sheets of the organisations, a well-capitalised public sector banks ready to increase the credit supply and the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector to name the major ones.

The economic growth is expected to be brisk for the financial investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors. Further, support to economic growth is expected to come from the expansion of public digital platforms and measures such as PM GatiShakti, the National Logistics Policy, and the Production-Linked Incentive schemes to boost manufacturing output.

Indias recovery from the pandemic was relatively quick, and growth in the upcoming year will be supported by solid domestic demand and a pickup in capital investment. It is aided byhealthyfinancials,emerging signs of new private sector capital formation cycle and governments substantial capital expenditure.

Opportunities and Threats

The electric control panel market is expected to grow at a CAGR rate of 6.7 %. The Government of India along with various state governments aggressive promoting and making incentives for Electric Vehicles and in the modernization of the state power distribution corporation by promoting Smart Meters. Increasing requirements for industrial plastics and medical plastics equipment are expected as good opportunity for the business.

The increasing price of commodities are challenging, it becomes difficult to retain the buying price and the global shortage of electronics and supply chain disturbance becomes a threat to the execution.

Segment wise performance

The Company has achieved highest revenue from operations in the financial year 2022-2023 to an extent of 36,081.78 Lakhs (previous financial 25,611.72 Lakhs) and has increased by 10,470.06 Lakhs over the previousyear financial year. The profit before interest and depreciation is 3,019.26 Lakhs as against 2,327.86 Lakhs for the previous financial year. The profit after tax is 1,992.70 year and has Lakhs as against 1,548.73 Lakhs for the previous financial increased by 28.67% compared to the previous financial year.

The main revenue segment of the Company, Electricals achieved highest turnover of 31,180.85 Lakhs (previous financial year 21,697.58 Lakhs). The Plastics segment recorded a turnover of 4,908.69 Lakhs (previous financial year 3,896.50 Lakhs). In both the segments, the Company continues to put its efforts in increasing the productivity levels, reduction of cost and adding new customers. There was a slight increase in generation of electricity by Wind Electric Generators

Outlook and Risks & Concerns

Competition from small traders make a serious price risk on the Electric Vehicles Charger Market. The evaluation of DBFOT model in the smart meter business tends big players only to have the access due to the need of large financials. Due to which there may be a slow down on the progress. Increase on the manpower cost, availability of skilled manpower and raw material cost are concern for the business operations. The Company is confident to overcome the concerns.

Internal Control System and Adequacy

The Company has adequate internal control system, commensurate with its size and nature of its business. The management has the overall responsibility for the Companys internal control system to safeguard the assets and to ensure reliability of the financial records. The Company has a budgetary control system and periodically the actual performance is reviewed and the deviations, if any, are addressed accordingly. The audit committee reviews all financial statements and ensures adequacy of internal control systems.

<p >Financial Performance

Particulars	Financial Year	Financial Year
	2022-2023	2021-2022
	( in Lakhs)	( in Lakhs)
Revenue from operations	36,081.78	25,611.72
Other Income	306.26	299.54
Profit before Interest, Depreciation & amortisation expense and exceptional items	3,019.26	2,327.86
Less: Interest	54.00	42.77
Profit before Depreciation & amortisation expense and exceptional items	2,965.26	2,285.09
Less: Depreciation & amortisation expense	245.89	220.64
Profit before Exceptional items and Tax	2,719.37	2,064.45
Less: Exceptional item	-	-
Less: Provision for Taxes	726.67	515.72
Profit after Tax	1,992.70	1,548.73

Human Resources

The organisation aims to achieve sustained growth through developing a skilled, motivated, and committed workforce.

Risk Management

The Company adopts a comprehensive and integrated risk appraisal, mitigation and management process. The risk appraisal and risk mitigation measures of the Company are being placed before the Board periodically for review and for improvement.

Details of key financial ratios

S.No Name of the Ratio	Financial Year	Financial Year	% of Change
	2022-2023	2021-2022
1 Debtors Turnover Ratio	4.65	4.59	1.31
2 Inventory Turnover Ratio	11.65	8.52	36.74
3 Interest Coverage Ratio	51.36	49.27	4.24
4 Current Ratio	1.84	2.00	-8.00
5 Debt Equity Ratio	0.03	0.03	0.00
6 Operating Margin (%)	6.85	6.98	-1.86
7 Net Profit Margin (%)	5.52	6.05	-8.76

Increase in Inventory Turnover Ratio is due to increase in sales / turnover.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

For the financial year 2022-2023: 8.59%. For the financial year 2021-2022: 7.27%

The reason for increase in Net Worth is due to increase in profit for the financial year 2022-

Cautionary Statement

The Management Discussion and Analysis Report contains forward looking statements based upon assumptions regarding global and countrys economic conditions and expectation of future events, etc., The factors that might influence the operations of the Company are demand-supply conditions, prices of the finished goods, material costs & availability, change in the government rules & regulations and natural calamities / any force majure events over which the Company has no control. The

Company assumes no responsibility on the accuracy of assumptions and perceived performance of the Company in future.

Place : Coimbatore	For and on behalf of the board
Date : May 25, 2023	Nethra. J.S. Kumar
	Chairperson and Managing Director
	DIN : 00217906