EcONQMic ANd iNdusTRy OVERViEW
Economic environment
After two turbulent years marked by the Covid-19 pandemic and
significant disruptions to economic activity, the global economy experienced a brief
recovery in the post-pandemic period before facing new challenges and crisis that pushed
it into another major slowdown. Policymakers were tested by rising costs of living and an
unfavourable business environment, while major global central banks played a crucial role
in navigating these challenges. However, their efforts to curb inflation through interest
rate hikes slowed economic activity in major developed markets.
In contrast, many developing markets were bright spots and are expected
to outperform developed economies in 2023. The International Monetary Fund (IMF) predicts
that global growth will slow from 3.4% in 2022 to 2.8% in 2023, with advanced economies
experiencing a significant slowdown
in growth from 2.7% in 2022 to 1.3% in 2023. Emerging market economies
(EMEs), on the other hand, are expected to have an average growth rate of 3.9% in 2023,
with a projected increase to 4.2% in 2024.
India has emerged as the worlds fastest-growing major economy, despite
facing challenges such as a global recession, inflation, public debt, and a squeeze on
real household incomes. From its previous position of tenth place ten years ago, India has
risen to become the fifth largest economy in the world. This economic success can be
attributed to several significant reforms, including liberalisation, reduced bureaucracy
and corruption, infrastructure investment, and improved access to finance for small and
medium-sized enterprises. These reforms have enabled India to establish itself as a major
player in the global economy, with projections for continued growth in the future. In the
2022-23 fiscal year, Indias economy experienced a growth rate of 7.0%, primarily driven
by a rebound in private consumption, which emerged as the leading driver of growth. The
surge in private consumption has also led to increased production activity and capacity
utilisation across various sectors. This rebound in private consumption is partly due to
the governments nearuniversal vaccination drive, which has boosted consumer sentiment and
helped people feel more confident about spending on contact-based services such as
restaurants, hotels, shopping malls, and cinemas. Over 2 billion vaccine doses have been
administered, making it the worlds second-largest vaccination drive.
Chemicals
Over the last decade, Indias chemical industry has excelled globally
in terms of demand growth and shareholder wealth creation. With the potential to
increasingly dominate both consumption and manufacturing on a global scale, India is
poised for success. Recent geopolitical changes have prompted many countries to prioritise
domestic self-sufficiency and localised supply chains. Indias manufacturing
competitiveness is noteworthy, and it has a significant advantage over other major global
chemical clusters, positioning it to potentially become the next hub for chemical
manufacturing.
Indias domestic consumption is expected to grow at a compound annual
growth rate (CAGR) of 9-10% until 2040, driven by a combination of factors. These include
rising disposable incomes, a favourable demographic dividend, an increasing global
preference for biofriendly alternatives, and a growing diversification of global chemical
supply chains. It is anticipated that by 2040, the Indian chemicals market will be worth
$850-1000 billion, accounting for 10-12% of the global chemicals market.
On the policy front, the Production Linked Incentives (PLI) scheme is a
positive measure as it provides incentives to the industry to quickly invest and commence
commercial sales. To promote Indias position as a global manufacturing hub for the
chemical industry, further incentives should be put in place to encourage growth and
development. By incentivising the industry, the government can facilitate the
implementation of new technologies, processes, and manufacturing practices that can
increase efficiency, reduce costs, and improve the overall competitiveness of the sector.
(Source: McKinsey & Company)
Textile
The textile sector is a crucial industry in the Indian economy,
contributing more than 2% to the total GDP and over 12% to the manufacturing sectors
gross domestic product (GDP). It is also the second-largest employer in India, following
agriculture, providing jobs to an estimated
45 million individuals directly and another 60 million indirectly
through associated activities. The textile industry is highly labour-
I intensive, utilising both skilled and unskilled workers and serving
as a vital source of employment for women. India is the largest producer of jute and
cotton, and the second-largest producer of silk. With an abundance of raw materials and
low labour costs, the cost of manufacturing textiles and apparel in India is significantly
lower than in many other countries.
The Indian textile and apparel market reached a value of US$
151.2 billion in 2021. Looking forward, the market is projected to
reach US$ 344.1 billion by 2027, exhibiting a CAGR of 14.8% during 2022-2027.
After a period of turbulence and uncertainty, the textile industry in
India is heading toward a positive steady growth phase. The Union Government has taken a
series of measures to revive the fortunes of the textile industry, which has created a
buoyant mood in the industry. These measures include promoting technical textiles,
implementing the PLI scheme, launching mega textile parks, and signing FTAs and MoUs with
many countries. The initiatives are aimed at propelling the fortunes of the Indian textile
industry to new heights.
Source: https://www.businesswire.com/news/home/20221207005733/en/Outlook-on-the-Textile-and-Apparel-Market-in-India-to-2027---Featuring-Welspun-Alok-Industries-Raymond-Limited-and-Bombay-Dyeing-Among-Others---R-
esearchAndMarkets.com
Real estate
In 2022, the real estate industry in India witnessed a significant
turnaround, with segments such as residential and retail recording strong year-on-year
growth after recovering from the COVID-19 pandemic. This impressive recovery makes 2022 a
turnaround year for the industry. Although growth has slowed for multinational
corporations in India, domestic demand has remained steady.
According to a report, the real estate market in India is expected to
exhibit a Compound Annual Growth Rate (CAGR) of 9.2% during 2023-2028. This growth can be
attributed to increasing business activity, improved job markets, and higher income
levels, all of which will inevitably lead to a rise in real estate demand.
Currently, our projects are being executed through the SPV route at the
following locations, are under various stages of implementation:
DK Metro Procon Private Limited
? Development of an Industrial Estate at a prime location in Chattral,
Gujarat
? Selling industrial plots and sheds, warehouses and offices and shops
Dual Metals Private Limited
? Developing a commercial building in Ahmedabad, ‘Kalpvruksh
Myspace Infracon LLP
? Selling plots to other industries in the industrial belt of
Ankleshwar, Gujarat
Ganesh Infrastructure and PMZ
Developers
? Multiple projects developed across 200,000 square meters of land in
Ankleshwar, Gujarat
? Projects covering residential buildings, row houses, commercial
complexes and shopping malls
Metals
Ferrous
The demand for ferrous metals is primarily driven by the steel
industry. India is the worlds second- largest producer of crude steel, and its steel
industry plays a significant role in the countrys economy, with strong linkages to
related industries.
Major steel companies in India have made significant investments in
improving production efficiency and reducing environmental impact. The Governments
policies and initiatives, such as the ‘National Steel Policy and ‘Make in
India campaign, have further stimulated growth in the industry. With strong urban
consumption and infrastructure spending, Indias steel demand is expected to experience
high growth, leading to increased demand for capital goods and automobiles, among other
things.
The Ministry of Steel has reported that the steel sector has
demonstrated promising performance between April and February of FY 2022-23. Cumulative
production of crude steel at 113.44 million tonnes (MT), finished steel at 109.35 MT, and
consumption of finished steel at 107.20 MT has surpassed the respective levels achieved
not only during the last two years affected by Covid-19 but also the pre-Covid years.
Non-ferrous
Over the years, the non-ferrous metals industry in India has
experienced healthy growth, aided by growing demand from end-users in sectors such as
automotive, construction, electrical, consumer durables, packaging, renewable energy, and
galvanised steel. Additionally, well-established related industries require access to raw
materials, which has further boosted demand.
Base non-ferrous metals, such as aluminium, copper, zinc, and nickel,
have been significantly affected by the pandemic due to supply constraints. However, the
industry has shown resilience and has adapted to the changing market conditions. The
demand for these metals is expected to continue to grow, driven by the increasing need for
infrastructure development and the transition to renewable energy.
Precious
Gold, silver, and platinum are the major players in the precious metals
industry across global markets, with gold being the most prominent. India, along with
Singapore and China, remains one of the major markets and key consumers of precious
metals.
In India, gold has significant cultural and traditional significance,
and is considered a symbol of wealth and prosperity. The demand for gold is driven by
various factors such as weddings, festivals, and investment purposes. The countrys
jewellery industry is one of the largest in the world, and gold accounts for a significant
share of the industrys revenue.
Silver also has a significant demand in India, primarily driven by the
jewellery and industrial sectors. The metal is used in various industrial applications
such as electrical and electronic components, solar panels, and water purification systems.
The demand for silver is also driven by investment purposes, with silver coins and bars
being popular investment options.
Platinum, on the other hand, has a relatively smaller market in India
compared to gold and silver. The metal is primarily used in the automotive industry for
manufacturing catalytic converters, as well as in the jewellery industry for making
high-end jewellery.
Silver in Jewellery: Silver jewellery is highly popular in India, and
there is a significant demand for it. It is considered an affordable and attractive
alternative to gold jewellery, which is often more expensive. The market for everyday wear
jewellery is expected to experience substantial growth in the upcoming years due to the
increasing purchasing power of women and their growing interest in a fashionable
lifestyle. This trend presents a significant growth opportunity for the market, with the
demand for silver jewellery in India projected to reach $6 billion by 2025, up from $3.5
billion in 2022.
Silver in Industry: Silver is an essential component in various
industries, including electrical switches, renewable energy, solar panels, computers,
mobile phones, electric vehicles, appliances, medicine, and water treatment, among others.
Indias overall demand for gold remained strong in 2022, despite a
marginal decline of 2.92% to 774 tonnes, due to a significant increase in prices. Even
though there was subdued trade and weaker consumer sentiment at the beginning of the year,
the demand for gold remained surprisingly resilient despite the hike in duty and sharp
rise in prices during the season.
FiNANciAL ANd OpERATioNAl PERFORMANCE
Consolidated financial results
In FY 2022-23, the Companys consolidated total Income for the year was
24,772.97 Lacs as compared to 25,478.32 Lacs in FY 2021-22. The
consolidated Profit before Tax for the year was 2,433.81 Lacs as compared to
1,591.22 Lacs in FY 2021-22. The consolidated Profit after Tax for the year was
1,913.14 Lacs as compared to 1,183.37 Lacs in FY 2021-22.
Standalone financial results
In FY 2022-23, the Companys standalone total Income for the year was
24,772.26 Lacs as compared to 25,477.80 Lacs in FY 2021-22. The standalone Profit
before Tax for the year was 2,428.10 Lacs as compared to 1,591.56 Lacs
in FY 2021-22. The standalone Profit after Tax for the year was 1,907.49 Lacs as
compared to 1,183.71 Lacs in FY 2021-22.
Ratios
|
Particulars |
FY Ended March 31, 2023 |
FY Ended March 31, 2022 |
Change between Current
& Previous FY |
Explanation |
|
Current Ratio |
13.96 |
7.03 |
98.46% |
During the year Current Ratio
has increased because current liabilities has decreased as they were paid during the year.
Also term deposits with current maturity less than 12 months increased as compared to last
year which increases the current assets. |
|
Debt Equity Ratio |
0.02 |
0.01 |
94.06% |
The Debt Equity Ratio measures
the financial ratio indicating the relative proportion of shareholder equity and debt used
to finance company asset. The Increase in ratio is due to Increase in the credit facility
utilised by the company at the end of the financial year as compared to last financial
year. |
|
Debt Service Coverage Ratio |
10.28 |
7.09 |
44.92% |
The debt-service coverage
ratio (DSCR) is a measure of the cash flow available to pay current debt obligations.
Increase in earnings has resulted into improved liquidity position of the Company to
service its debt obligations in a timely manner. |
|
Return on Equity |
5.37% |
3.43% |
56.31% |
Return on equity shows
companys proficiency to generate profits from its shareholders investments.
The Increase in ROI ratio is due to Increase in return on investment
compared to last year. |
|
Inventory Turnover Ratio |
17.92 |
19.75 |
-9.26% |
NA |
|
Trade receivable Turnover
Ratio |
20.12 |
19.88 |
-1.21% |
NA |
|
Trade payable Turnover Ratio |
25.33 |
29.63 |
-14.50% |
NA |
|
Net capital Turnover Ratio |
1.32 |
1.64 |
-19.51% |
NA |
|
Net Profit Ratio |
8.13% |
4.76% |
70.69% |
Net profit ratio measures how
much net income is generated as a percentage of revenues received. During the year Company
has sold long term investments at profit resulting in increase in Net Profit Ratio as
compared to last year. |
|
Return on Capital employed |
6.84% |
4.57% |
49.84% |
This ratio can help to
understand how well a Company is generating profits from its capital as it is put to use.
It Indicates that the Company is able to generate more profit on the
Capital Employed as compared to last year. |
|
Return on Investment |
16.43% |
4.64% |
254.55% |
Return on Investment (ROI) is
a popular profitability metric used to evaluate how well an investment has performed.
During the year the Company has sold long term investments at profit so it increases the
ROI as compared to last year. |
Human capital
At the core of the Companys values is a deep appreciation for its
employees, recognising them as the driving force behind the Companys growth and success.
With their talents, dedication, and hard work, the Company has been able to achieve
remarkable progress and development thus far. The Companys commitment to its employees
extends beyond recognising their contributions. It
0 aims to provide them with an rironment that supports their sonal and
professional growth.
5 Company strives to create a ture of learning, where employees encouraged
to develop their ls and knowledge continually. It ognises that the better-equipped
employees are, the better they
1 perform their tasks, and the ter the Company can deliver on
its commitments. In order to keep its workforce motivated, the Company
emphasises the importance of providing a work-life balance that promotes employee
satisfaction and well-being. As such, the Company provides its employees with incentives
and rewards, as well as opportunities for career advancement and personal growth.
Risk management
The Company understands the importance of a comprehensive risk
management system in light of the ever-evolving risks arising from market volatilities and
other external factors. As a result, it has established a robust Enterprise Risk
Management (ERM) architecture. The primary objective of the ERM framework is to identify
risks and mitigate them at various levels.
Risks |
Mitigation measures |
Interest rate fluctuation |
Managing prudently using sound
financial acumen |
Foreign exchange rate
fluctuations |
Mitigating through hedging on
contracts |
Market volatility |
Guarded through our
diversified business portfolio |
Clients procuring from other
sources |
Diversified business helps in
not being dependent on any one industry sector, thereby mitigating this risk |
Outlook
The global economy has demonstrated remarkable resilience due to robust
labour markets, strong household consumption, and business investments, which have
provided support for economic growth. Despite the recent surge in consumer demand, core
inflation, which excludes volatile energy and food prices, is anticipated to remain under
control. Looking forward, a moderate economic outlook is expected for 2023, with a
projected growth rate of 2.8%. To address inflationary pressures, contractionary monetary
policies are being implemented, and fiscal policies are being developed to alleviate the
cost of living in line with these monetary policies. These measures are expected to drive
economic stability and foster sustained growth.
While Indias GDP growth rate is expected to moderate to 6% in the
upcoming fiscal year, FY 2023-24, the countrys recovery from the COVID-19 pandemic
remains impressive. Furthermore, robust domestic demand and increased capital investment
are expected to be significant drivers of growth for FY 2023-24, accelerating economic
activities across India. Despite potential challenges from global spillovers, high
inflation, and aggressive monetary policies, Indias economic fundamentals remain
robust.
Its financial system is well-prepared to support the countrys
economic recovery, and the year ahead is expected to see a rebound in private- sector
investment. Additionally, Indias large foreign exchange reserves that exceed its
external debt provide added strength to the economy. Participating in a steady and
measured withdrawal of liquidity by central banks worldwide, including in India, is
anticipated to support growth in a nondisruptive manner.
Internal control systems and adequacy
The Company has a strong internal control systems and best-in-class
processes in place, commensurate with its size and scale of operations. There is a
well-established Management Audit comprising of professionally qualified accountants. They
implement extensive audit throughout the year across all functions and areas. After
carrying out the audit, they submit reports to the Management and Auditors. Committee
about the compliances with internal control, and efficiency and effectiveness of
operations and key processes risks. Some key features of the Companys internal
control system are:
• Adequate documentation of policies and guidelines
• Internal Audit processes
• Strong compliance management system
• Internal Audit executed in accordance with auditing standards to
review design effectiveness of internal control systems and procedures to manage risks,
monitoring control, compliance with
• relevant policies and procedures and recommend improvement in
processes and procedures.
Cautionary statements
Statements in this Report, those which relate to the Management
Discussion and Analysis, describing the Companys objectives, projections, estimates
and expectations, may constitute ‘forward-looking statements within the meaning
of applicable laws and regulations. The Companys actual results and achievements may
differ from those expressed or implied. Several factors that could significantly impact
the Companys operations include economic conditions affecting demand, supply and
price conditions in the domestic and overseas markets, changes in the Government
regulations, tax laws & other statutes and other such incidental factors, over which
the Company does not have any direct control. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
+91-9892691696
