The Management of the Company is pleased to present its report on the Industry Scenario
including on the Companys performance during the financial year 2022-23.
1. INDUSTRY STRUCTURE AND DEVELOPMENTS
Global Economic Outlook
Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent
in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in
the April 2023 World Economic Outlook (WEO), it remains weak by historical standards. The
rise in central bank policy rates to fight inflation continues to weigh on economic
activity. Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8
percent in 2023 and 5.2 percent in 2024. Underlying (core) inflation is projected to
decline more gradually, and forecasts for inflation in 2024 have been revised upward.
The recent resolution of the US debt ceiling standoff and, earlier this year, strong
action by authorities to contain turbulence in US and Swiss banking reduced the immediate
risks of financial sector turmoil. This moderated adverse risks to the outlook. However,
the balance of risks to global growth remains tilted to the downside. Inflation could
remain high and even rise if further shocks occur, including those from an intensification
of the war in Ukraine and extreme weather-related events, triggering more restrictive
monetary policy. Financial sector turbulence could resume as markets adjust to further
policy tightening by central banks. Chinas recovery could slow, in part as a result of
unresolved real estate problems, with negative cross-border spillovers. Sovereign debt
distress could spread to a wider group of economies. On the upside, inflation could fall
faster than expected, reducing the need for tight monetary policy, and domestic demand
could again prove more resilient.
In most economies, the priority remains achieving sustained disinflation while ensuring
financial stability. Therefore, central banks should remain focused on restoring price
stability and strengthen financial supervision and risk monitoring. Should market strains
materialize, countries should provide liquidity promptly while mitigating the possibility
of moral hazard. They should also build fiscal buffers, with the composition of fiscal
adjustment ensuring targeted support for the most vulnerable. Improvements to the supply
side of the economy would facilitate fiscal consolidation and a smoother decline of
inflation toward target levels.
SUMMARY OF OUR BUSINESS
Loyal Equipments limited is SMERA certified, ASME "U" & "U2"
Stamp holder, one of the known reputed company in India for design, manufacturing, supply
and erection/commissioning of process equipments like Pressure vessels, Air cooled heat
exchanger, Shell & tube heat exchanger, Storage tanks, Pressure receivers, Chimney,
Heavy structural items, Skids, Base plates and other items for Oil/Gas, petroleum,
chemical, sugar, steel, fertilizers and power plant sector.
Loyal Equipment follow Quality Management Systems for the entire business process right
from the beginning to manufacturing/fabrication and installation at the site. Loyal
Equipment is having continuously long experience with EIL, GSPC, GAIL, ONGC, Ingersoll
Rand, Linde, Dresser Rand, L&T, Reliance, ALSTOM, Kirlosker, Texas Southpiller-USA and
others govt. & private organization.
SALIENT FEATURES OF OUR PRODUCTS:
• Produced from the toughest materials like steel, nonferrous materials.
• Compliance to customer Requirements
• Adherence to the Quality standards as required by monitoring agencies
• Timely Delivery
• Customization
• Consignment packaging as per specification of customer.
OUR COMPETITIVE STRENGTHS
We believe that the following are our primary competitive strength:
Customized Product Offering
Our Company offers customization facilities to the customers, so that they can avail
the products as per their specifications. The companies which require the products as per
their specification approach us. We design the products as per the specifications and
requirements of the clients. This provides a complete satisfaction to our clients and
enables us to expand our business from existing customers, as well as address a larger
base of potential new customers.
Quality Assurance and Standards
We believe in providing our customers the best possible quality products. We have
developed quality policies of the Company to provide our client the best possible quality
product. We adopt quality check to ensure the adherence to desired specifications, quality
and standards. Since, our Company is dedicated towards quality products, processes and
inputs; we get repetitive orders from our clients, as we are capable of meeting their
quality standards.
Existing Customer Relationship
We believe that we constantly try to address customer needs around a variety of
products. Our existing customer relationships help us to get repeat business from our
customers. This has helped us maintain a long term working relationship with our customers
and improve our customer retention strategy. We believe that our existing relationship
with our customers represents a competitive advantage in gaining new customers and
increasing our business.
Existing Relationship with Suppliers
We have acquired raw materials from several suppliers and have contacts with them for a
long time. We believe that our strong relationships with suppliers will enable us to
continue to grow our business. Due to our relationships with our suppliers, we get quality
and timely supplies of raw materials. This enables us to manage our inventories and supply
quality products on timely basis to our customers. This in turn has enabled us to generate
repeat business.
OUR BUSINESS STRATEGY
Meeting Customer Requirements
Our Company intends is to provide the customer with 100% satisfaction. We clearly
understand the requirement and specification of the products required by the clients.
Based on these requirements and specification products are designed and developed,
customization is done wherever required. The products are manufactured using good quality
material procured from reliable sources so that the customers receive the products with
the best possible quality standards within the stipulated time frame.
Adopting Automation in Production Process
We possess sound manufacturing facility which is assisted by our production team. The
manufacturing unit is outfitted with the requisite machines, tools and equipments. The
production process are designed and carried out as per the industry standards.
To build-up a Professional Organization
As an organization, we believe in transparency and commitment in our work and with our
suppliers, customers, government authorities, banks, financial institutions etc. We have
an experienced and technically sound team for taking care of our day to day operations. We
also consult with external agencies on a case to case basis on technical and financial
aspects of our business.
Optimal Utilization of Resources
Our Company constantly endeavors to improve our production process, skill up-gradation
of workers, modernization of machineries to optimize the utilization of resources. We
regularly analyze our existing raw material procurement policy and manufacturing processes
to identify the areas of bottlenecks and correct the same. This helps us in improving
efficiency and putting resources to optimal use.
2. OPPORTUNITIES AND THREATS
Our Products are widely used in the industries like Petro-chemicals, Compressor
Industries, Power Plants, Fertilizers, Refinery, Pharmaceuticals and Dairy Industry. We
manufacture and design the products as per the needs of the customer, so that they can
avail the products as per their specifications and customizations. We have enlisted with
governments undertaking and other parties such as Engineers India Limited, and Gujarat
State Petronet Ltd., as registered supplier for supply of Pressure Vessels and Heat
Exchangers. Also our Company is a member of Heat Transfer Research Inc, the worlds
premier source of technology information, services and software in field of process heat
transfer.
Further, Our Company is authorized under The American Society of Mechanical Engineers
(ASME) for "U" and "U2" Stamp on Manufacture of pressure vessels and
also authorized by The National Board of Boiler & Pressure Vessel Inspectors for
"NB" Mark in Pressure Vessels and other pressure retaining items. Increased
Competition from Local & Big Players and Change in Government Policies are major
threats to the Company
3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
Loyal Equipments Limited is SMERA certified, ASME "U" & "U2"
Stamp holder, one of the known reputed company in India for design, manufacturing, supply
and erection/commissioning of process equipments like Pressure vessels, Air cooled heat
exchanger, Shell & tube heat exchanger, Storage tanks, Pressure receivers, Chimney,
Heavy structural items, Skids, Base plates and other items for Oil/Gas, petroleum,
chemical, sugar, steel, fertilizers and power plant sector.
Loyal Equipments is having kind of latest machineries, tools, skilled man power,
handling equipment and various in house facilities for smooth operation and quality
product. We have developed a sound infrastructure base that is subject to regular
upgradation based on technology and working systems. Our company having 28500 sq. meters
of land, In which infrastructure is setup over 3526 sq. meters with well-furnished office
spread over an area of 136 sq. meters.
4. OUTLOOK
The engineering sector is the largest of the industrial sectors in India. It accounts
for 27% of the total factories in the industrial sectors and represents 63% of the overall
foreign collaborations. Indias engineering sector has witnessed a remarkable growth over
the last few years driven by increased investment in infrastructure and industrial
production. The engineering sector, being closely associated with the manufacturing and
infrastructure sectors, is of strategic importance to Indias economy.
India, on its quest to become a global superpower, has made significant stride towards
developing its engineering sector. The Government has appointed Engineering Export
Promotion Council (EEPC) as the apex body in charge of promotion of engineering goods,
products, and services from India. India export transport equipment, capital goods, other
machinery/equipment, and light engineering products such as castings, forgings, and
fasteners to various countries of the world. The Indian semiconductor industry offers a
high growth potential area as industries which source semiconductors as inputs are
themselves witnessing high demand.
India became a permanent member of the Washington Accord (WA) in June 2014. The country
is now a part of an exclusive group of 17 countries who are permanent signatories of the
WA, an elite international agreement on engineering studies and mobility of engineers.
5. THREATS, RISK AND CONCERNS
The Company is concerned about prevailing exposure norms, financial position, entry of
new players in the market, rising competition from banks & multilateral agencies,
uncertain business environment, fluctuation in rupee, likely increase in cost of capital
due to volatile market conditions. Further, the state of business and policy environment
in the country also has a cascading effect on the interest-rate regime, cost and
availability of raw materials and gestation period & capital outlays required for raw
material. General economic conditions may also affect the capacity and production of the
manufacturing of the products.
6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company maintains an adequate system of Internal Controls including suitable
monitoring procedures to ensure accurate and timely financial reporting of various
transactions, efficiency of operations and compliance with statutory laws, regulations and
Company policies. Suitable delegation of powers and guidelines for accounting have been
issued for uniform compliance. In order to ensure that adequate checks and balances are in
place and internal control systems are in order, regular and exhaustive Internal Audit of
Office/plant are conducted by the in-house Internal Audit Division and external
professional audit firm. The Internal Audit covers all major areas of operations,
including identified critical/risk areas, as per the Annual Internal Audit Programme. The
Audit Committee of Directors periodically reviews the significant findings of different
Audits, as prescribed in the Companies Act, 2013 and in the SEBI (Listing Obligations
& Disclosure Requirements) Regulations, 2015.
4. FINANCIAL AND OPERATIONAL PERFORMANCE
Standalone Revenue from the operations of your Company for the year 2022-23 was
Rs.4929.29 Lakhs which is 52.81% lower than Rs. 3225.76 Lakhs in the previous year. Profit
before Depreciation Interest & Tax for the current year was Rs. 962.59 Lakhs against
loss of Rs.175.65 Lakhs in the previous year. Total Comprehensive Income after tax for the
current year at Rs.597.81 Lakhs against loss of Rs 509.92 Lakhs in the previous year.
5. HUMAN RESOURCES / INDUSTRIAL RELATIONS
The Company gives utmost importance to the capacity-building and well-being of its
employees. The Industrial Relations in the Company continued to be on a cordial note.
There are regular interactions between the management and the
representative-associations on issues pertaining to employee welfare. The Company has an
atmosphere of trust and cooperation, which results in a motivated work force and
consistent growth in the performance.
6. ANALYSIS OF SIGNIFICANT CHANGES IN FINANCIAL RATIOS
As per the recent amendments to the SEBI Listing Obligations & Disclosure
Requirements (LODR), we give below additional information in respect of financial
parameters that are applicable to our company:
Detail of Significant changes (i.e. change of 25% of more as compared to the
immediately previous financial year) in key financial ratios, along with detailed
explanation therefore as under:
a) Debtor Turnover Ratio: The Debtor Turnover ratio as on March 31, 2023 is 4.71
times as compared to previous year ended on March 31, 2022 is 4.48 times. The change in
the ratio is 5.02 % as compared to Previous Year
b) Inventory Turnover Ratio: The Inventory Turnover Ratio as on March 31, 2023 is
2.63 times as compared to previous year ended on March 31, 2022 is 1.72 times. The change
in the ratio is 52.79% as compared to Previous Year due to changes in Inventory level
& Inventory holding Period.
c) Interest Coverage Ratio: The Interest Coverage Ratio as on March 31, 2023 is
5.58 times as compared to previous year ended on March 31, 2022 is (4.35) times. The
change in the ratio is 177.98 % as compared to Previous Year.
d) Current Ratio: The Current Ratio as on March 31, 2023 is 1.54 times as compared
to previous year ended on March 31, 2022 is 1.26 times. The change in the ratio is 21.73 %
as compared to Previous Year.
e) Debt Equity Ratio: The Debt Equity Ratio as on March 31, 2023 is 0.61 times as
compared to previous year ended on March 31, 2022 is 1.06 times. The change in the ratio
is 42.73 % as compared to Previous Year.
f) Operating Profit Margin: The Operating Profit Margin Ratio as on March 31, 2023
is 19.53% as compared to previous year ended on March 31, 2022 is (5.45) %. The change in
the ratio is 127.88 % as compared to Previous Year.
g) Net Profit Margin: The Net Profit Margin Ratio as on March 31, 2023 is 12.11% as
compared to previous year ended on March 31, 2022 is (15.88) %. The change in the ratio is
176.23 % as compared to Previous Year.
Cautionary Note
Certain statements in "Management Discussion and Analysis" section may be
forward looking and are stated as required by applicable laws and regulations. Many
factors may affect the actual results, which could be different from what the Management
envisages in terms of future performance and outlook.
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