mishra dhatu nigam ltd share price Management discussions

FORWARD LOOKING STATEMENTS:

Certain statements in this report regarding our business operations may constitute forward-looking statements. These include all statements other than statements of historic fact, including those regarding the financial position, business strategy, management plans and objectives for future operations. Forward looking statements can be identified by words such as ‘believes, ‘estimates, anticipates, ‘expects, ‘intends, may, will, plans, outlook and other words of similar meaning in connection with a discussion of future operational or financial performance. Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and that may be incapable of being realized, and as such, are not intended to be guarantee of future results, but constitute our current expectations based on reasonable assumptions. Actual results could differ materially from those projected in any forward-looking statements due to various events, risks, uncertainties and other factors. We neither assume any obligation nor intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The financial statements are prepared under historical cost convention, on accrual basis of accounting and in accordance with the provisions of the Companies Act, 2013 (the "Act") and comply with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. The management of Mishra Dhatu Nigam Limited ("MIDHANI" or "the Company") has used estimates and judgments relating to the financial statements on a prudent and reasonable basis in order that the financial statements reflect in a true and fair manner, the state of affairs for the year.

The following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the Annual Report._

Global economic overview:

The global economy finds itself in a profoundly uncertain period once more, as the combined impact of recent adverse events spanning three years—most notably, the COVID-19 pandemic and the conflict between Russia and Ukraine—unfolds in unforeseen ways. Driven by pent-up demand, persistent supply disruptions, and surges in commodity prices, inflation soared to levels not seen in decades in numerous economies. Consequently, central banks embarked on aggressive tightening measures to rein in inflation, aiming to restore it to their desired targets and maintain stable inflation expectations.

The baseline forecast is for global output growth, estimated at 3.4 percent in 2022, to fall to 2.8 percent in 2023, 0.1 percentage point lower than predicted in the January 2023 World Economy Outlook before rising to 3.0 percent in 2024.

For advanced economies, growth is projected to decline by half in 2023 to 1.3 percent, before rising to 1.4 percent in 2024. About 90 percent of advanced economies are projected to see a decline in growth in 2023.

For emerging market and developing economies, economic prospects are on average stronger than for advanced economies, but these prospects vary more widely across regions. On average, growth is expected to be 3.9 percent in 2023 and to rise to 4.2 percent in 2024.

In low-income developing countries, GDP is expected to grow by 5.1 percent, on average, over 2023–24, but projected per capita income growth averages only 2.8 percent during 2023–24, below the average for middle-income economies (3.2 percent) and so below the path needed for standards of living to converge with those in middle-income economies.

International Monetary Fund (IMF) global growth forecast, as of April 2023 (% change year on year)

Particulars	2022	Projections 2023	Projections 2024
World Output	3.4	2.8	3.0
Advanced Economies	2.7	1.3	1.4
Emerging Market and Developing Economies	4.0	3.9	4.2
India	6.8	5.9	6.3
China	3.0	5.2	4.5
Low income developing countries	5.0	4.7	5.4
Source: IMF, World Economic Outlook April 2023

In 2023, the Asia-Pacific region is poised to be the most vibrant among the worlds major regions, fueled primarily by the promising prospects of China and India. These two leading emerging market economies are anticipated to account for approximately half of the global economic growth this year, while the remaining countries in Asia and the Pacific region are projected to contribute an additional fifth.

In China, the economy is expected to expand by 5.2 percent in 2023, as the rapid economic reopening generates a strong recovery in private consumption. In India, growth momentum will begin to slow as softening domestic demand offsets strong external services demand; growth is expected to moderate slightly from 6.8 percent in 2022 to 5.9 percent this year.

Indian economic overview

India has already claimed its position as the fifth largest global economy based on market exchange rates and holds the third spot when considering purchasing power parity (PPP). Projections from the Organisation for Economic Cooperation and Development (OECD) indicate that India is poised to ascend further, becoming the second largest economy worldwide in terms of PPP by the year 2048. A conducive domestic policy environment and the Governments sustained focus on structural reforms have kept Indias economic activity robust despite global headwinds. A combination of rising disposable income, easy availability of credit and a lowering interest rate in the wake of a stabilising inflation trajectory will bode well for economic growth, going forward.

Indias economy remained remarkably resilient amid concerns of an impending global recession, reaffirming its position as one of the fastest-growing major economies in the world. T despite combating several challenges such as high inflation, soaring commodity prices and disruptions in global trade due to geopolitical conflicts in Europe. However, the Government and the Reserve Bank of India (RBI) have implemented several measures to tackle these concerns and their efforts are expected to bear fruit, as demonstrated by declining global commodity prices. Overall, Indias economy is on course to achieve significant progress in the upcoming fiscal year.¹ The Union Budget for FY24 includes major provisions for agriculture development and farmers welfare. The services sector is projected to clock a year-on-year growth rate of 9.1% in FY23, surpassing the 8.4% growth recorded in FY22. This expansion is driven by strong pent-up demand for contact-intensive services, which has been enabled by the worlds largest vaccination programme. Private consumption has maintained its upward trend, with a projected growth rate of 7.7% in FY23, slightly lower than the 7.9% growth rate observed in FY22.²

Industry overview:

The global superalloys market was valued at $6.8 billion in 2021, and is projected to reach $15.1 billion by 2031, growing at a CAGR of 8.5% from 2022 to 2031. The market for superalloy is expanding due to increased demand from the rising nations, caused by their increased need for electrical power. The surge in demand for industrial gas turbines, particularly for the oil and gas industry in developing countries like India, Brazil, China, and West Africa, is also anticipated to present the industrys players with major development prospects in the near future.³ The steel industry has grown significantly over time. The country is now a global force in steel production and the 2^nd largest crude steel producer in the World and it also aids to key industries like engineering, construction, infrastructure, transportation, and defence.

According to a report by CARE edge research, the production and consumption of domestic steel grew by 5.7% and 11.5%, respectively, on a year-on-year (y-o-y) basis during the first nine months of FY23 (April-December). Production of domestic crude steel increased by 5.7% over the same period last year, from 77.58 Mt to 81.96 MT and the consumption of same increased by 11.5% which increased to 75.340 MT from 67.32 MT last year.⁴ The growth of this sector depends on the availability of its raw material i.e. iron ore which is crucial because of inefficiencies and environmental concerns.

If we look into the exports of the steel sector, it recorded a 13.5 MT of steel in FY 22 where China and Europe were our major consumers. But reverse happen in first nine months of FY 23, it declined sharply by 54% as compared to the last year and the obvious reasons were the geopolitical tensions and inflationary pressures aided by 15% export duty imposed by government. Where the imports have increased by 27.4% to 4.4 million tonnes in 9M FY23 from 3.5 million tonnes over the same period in FY22. As per CareEdge Research,the growth in low-cost imports from Russia and the decline in global prices are to blame for this.

The Government has introduced several initiatives for the growth of steel sector. The Cabinet has approved the PLI Scheme for domestic manufacture of speciality steel at an outlay of INR 6322 Crore. The government has launched BIS certification programmes for supply of high-quality exports but because of the sustained emphasis on infrastructure development and the uptick in real estate and construction activity during an overall economic recovery, the domestic steel demand growth will be solid at 10-12% in FY23.

High performance alloys:

Rapid industrialisation and the emergence of Industry 4.0 are driving the requirement for high-performance alloys in machines to operate efficiently in corrosive and high-temperature environments. The expanding aerospace sector requires lightweight, high-strength alloys such as Aluminium, Titanium and Magnesium for the efficient performance of turbine blades operating at high temperatures. Greater demand for lightweight automobiles due to improved living standards is contributing to the increased use of advanced high-performance alloys in vehicles for weight reduction.

In the United States, the market for high-performance alloys is anticipated to reach USD 2 billion in 2022. China, the second-largest economy in the world, is predicted to have a market for high-performance alloys worth USD 2.2 billion by 2030, growing at a 6.3% CAGR from 2022 to 2030. Japan and Canada are two notable geographic markets, with growth rates of 3.8% and 4.1%, respectively, expected between 2022 and 2030. Germany is anticipated to expand at a CAGR of roughly 4.4% within Europe.⁵ According to recent trends, the global high-performance alloys market is expected to grow from USD 8 billion in 2022 to USD 11.8 billion by 2030, at a CAGR of 5% during the forecast period. High-performance alloys, commonly referred to as super-alloys, are metallic materials which offer enhanced properties, such as increased mechanical strength, improved corrosion and oxidation resistance, along with high thermal creep resistance. These properties enable them to withstand use in demanding applications in the aerospace and marine industries.

High-performance alloys are also required in various components of power generation equipment, including gas turbines, steam turbines and boilers. The increasing demand for clean energy and the growing focus on energy efficiency are expected to drive the demand for high-performance alloys in the energy industry. In addition to this, high-performance alloys are used in the medical industry in various medical devices and implants. These alloys exhibit excellent biocompatibility, corrosion resistance and strength, making them ideal for use in medical applications. The increasing demand for minimally invasive surgical procedures and the increasing incidences of chronic diseases are expected to drive the demand for high-performance alloys in the medical industry.

Defence manufacturing

In several nations, including India, increased government expenditure in the defence sector will encourage industry growth. The rise reflects the Governments commitment to sustainable progress in the fields of infrastructure development and modernisation of the defence services. Under the ‘Make in India programme, numerous policy initiatives have been implemented in recent years that have reduced the import of defence equipment by promoting indigenous design, development and manufacturing.

According to key market trends, the global defence manufacturing market is expected to grow from USD 523.9 billion in 2020 to USD 713.1 billion by 2025, at a CAGR of 6.4% during the forecast period.

The increasing demand for defence products is driven by the need to modernise and upgrade military equipment and capabilities, along with intensifying geopolitical tensions and security threats. The United States is the largest market for defence products, with an estimated annual expenditure of over USD 700 billion. Other significant markets include China, India, Russia and Saudi Arabia. India is the third-largest military spender in the world, with defence spending at 2.15% of the overall GDP. The Indian government has set aside USD 130 billion over the next five to seven years for fleet modernisation across the military forces. The Union Budget for FY 2023–24 allocates INR 5.94 lakh crore to the sector, marking an increase of 13% from the previous year.⁶ By 2025, the Ministry of Defence targets a revenue of INR 1.75 lakh crore from aerospace and defence manufacturing, including INR 35,000 crore in exports. Up until April 2023, 369 companies working in the defence sector received a total of 606 industrial licences.⁷

The Government of India has established two Defence Industrial Corridors in Uttar Pradesh and Tamil Nadu. The two defence corridors in Uttar Pradesh and Tamil Nadu have together signed 158 Memorandum of Understanding (MoUs) with industries representing investments worth USD 2.9 billion. To enable innovation within the defence and aerospace sector, there are supportive government schemes such as iDEX (Innovations for Defence Excellence) and DTIS (Defence Testing Infrastructure Scheme).⁸

Indian Aerospace Industry

By 2030, the Aerospace and Defence (A&D) market in India is predicted to be worth about USD 70 billion as a result of favorable government schemes and enhanced infrastructure. In India, the number of airline passengers has grown at a rate of about 15% annually over the last five years, going from about 70 million to 200 million passengers for both domestic and international flights. Additionally, it is estimated that around 100 million Indians travelled internationally by air last year, indicating a high demand for airline services and seats.⁹ In comparison to developed Western countries, the Indian aerospace industry is now relatively small (USD 250 million) in terms of component manufacturing. However, it is positioned for a rapid phase of expansion over the following ten years owing to strong tailwinds.¹⁰ These tailwinds include large acquisitions of defence aircraft, a formidable workforce of engineers and government schemes such as Make in India, the maiden National Civil Aviation Policy, policies driving infrastructure development and the increased ease of doing business.

In summary, the Indian aerospace industry is expected to continue its growth trajectory in the coming years, driven by the governments focus on developing the defence and aviation sectors and increasing private sector participation and investments in R&D. The industrys focus on indigenous capabilities and the adoption of new technologies is expected to further enhance the competitiveness of Indian aerospace companies in the global market.

Energy sector

Power transmission is critical to Indias electricity infrastructure and has increased substantially in recent years. According to the Central Electricity Authority (CEA), Indias installed transmission capacity has gone up from 483,390 MW in March 2015 to 416058 MW in March 2023, with 17,2010 MW coming from renewable energy sources. The surge in the nations power generation capacity and the governments emphasis on enhancing the nations power infrastructure have been the primary growth enablers of the increased transmission capacity.¹¹ 5000 compressed biogas (CBG) units are likely to be installed as part of the Sustainable Alternative towards Affordable Transportation (SATAT) Scheme. By 2040, Indias oil consumption will increase by around 4 million barrels per day, the largest recorded in any country.¹² The Green Energy Corridor project is one of the main steps the Indian government has taken to boost power transmission. With this project, the nations transmission network will be strengthened, making it easier to transport renewable energy from outlying power plants. This project will modernise the nations transmission network, making it easier to transmit renewable energy from remote power facilities. This plan supplements the GEC-Phase-I programme, which is already being implemented in the states of Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu for grid integration and power evacuation of approximately 24 GW of renewable energy and is projected to be completed by 2022. To achieve the target of 450 GW of installed RE capacity by FY 2030, the gearbox systems will be developed from FY 2021-22 to FY 2025-26.¹³ A considerable amount of private sector involvement has also been observed recently in the Indian power transmission industry. Through the tariff-based competitive bidding process, private companies are investing in the development of transmission infrastructure, which has led to intense competition and higher efficiency in the industry. The CEA estimates that private sector involvement in the gearbox industry will rise from 16% in March 2015 to 50% in March 2023.¹⁴

Super alloys

Super alloys are high-performance materials that are designed to operate in extremely high temperature, pressure and stress environments. They are used in several industries, including aerospace, power generation and oil and gas. The global super alloy market was valued at USD 6.8 billion in 2021 and is projected to reach USD 15.1 billion by 2031. It is expected to grow at a CAGR of 8.5% from 2022 to 2031.¹⁵

The aerospace industry is the largest consumer of super alloys. The aerospace industrys demand for super alloys is being fuelled by the increasing use of lightweight materials as well as the necessity for high-performance engines and turbines. Super alloys are also extensively utilised in the power generation industry, particularly in gas turbines used for power generation. The requirement for higher efficiency and lower emissions drives the demand for super alloys in this industry. Another major consumer of super alloys is the oil and gas industry, especially for drilling and exploration equipment. The increasing complexity of oil and gas exploration, as well as the requirement for materials that can endure the extreme environments inherent in offshore drilling, are contributing to the demand for super alloys in this industry. The global super alloys market is poised to experience significant growth in the coming years. This growth can be attributed to the increasing demand from the aerospace, power generation and oil and gas industries. The unique properties of super alloys make them ideal for use in extreme environments, and they are expected to play an essential role in the development of new technologies in these industries.

Titanium

Titanium is a high-strength, low-density metal that is corrosion-resistant and has excellent heat resistance, making it ideal for use in a wide range of applications. The global Titanium market was valued at USD 28 billion in 2023 and is predicted to grow at a CAGR of 6.5% to reach a market valuation of USD 52.5 billion by the end of 2033.¹⁶ The titanium industry in India has seen significant growth in recent years. India is one of the worlds largest producers of titanium minerals, with the majority of the production coming from Odisha. The country also has significant reserves of titanium, estimated at around 360 million tonnes, according to a report by the Geological Survey of India.

The Indian titanium industry is primarily focused on the aerospace and defence sectors, with titanium alloys being used in aircraft and missile components. The industry is also expanding into other sectors, such as medical devices, automotive and sports equipment. The Indian titanium industry has substantial potential for growth in the coming years. The countrys significant reserves of titanium minerals, along with enhanced government impetus and favourable policies, make it an attractive destination for investment in the industry.

Speciality alloys

Specialty alloys are advanced materials that are designed to perform under extreme conditions. They find application in diverse industries, including aerospace, defence, automotive, medical and oil and gas. The global speciality alloys market was worth USD 7.24 billion in 2022 and is projected to reach USD 12.26 billion by 2028, growing at a CAGR of 9.3% from 2021 to 2028.¹⁷ Speciality alloys are a combination of two or more metals, including Nickel, Titanium, Aluminium, Copper and others. They exhibit unique properties such as high-temperature strength, corrosion resistance and high wear resistance, making them ideal for use in extreme environments.

The aerospace and defence industry is also a significant consumer of speciality alloys, particularly for armour and ballistic protection. The demand for speciality alloys in this sector is driven by the need for materials that can withstand high-velocity impacts and explosions.

In the coming years, the global speciality alloys market is expected to experience significant growth, driven by increasing demand from the aerospace, defence, medical and oil and gas industries. Speciality alloys are expected to play an essential role in the development of new technologies in these industries.

Major strategies and initiatives implemented

Strategies	Plans	Initiatives
Focus on key strategic customers	• Focus on retaining current strategic clients in Aerospace and Defence (A&D) sector, in face of emerging competition.	The sales to Defence Sectors increased from 22 % in FY 22 to 40% in FY 23.
Modernization and Capacity Augmentation	• Maximizing installed capacities, widening, and diversifying into other sectors.	Several modernization initiatives such as 10 Ton Vacuum Arc Remelting Furnace (New Titanium Shop), 30T Bogie Hearth Furnace and 20T Fixed
	• Based on core capabilities strengthen domestic market share along with increased revenues.	Hearth Furnace. These initiaives are expected to enhance efficiency and capacity building.

SWOT analysis:

Strengths

Technical expertise: Core competence and integrated manufacturing facility to develop, manufacture, Strategic metals & alloys, custom-made alloys. The Company has a team of highly skilled engineers who have employed innovative technologies and created best-in-class products.

Diverse range of Products: Capability to produce a range of semi-finished and finished products like forged rings, near net-shapes and Titanium tubes.

Strategic Customer Base: MIDHANIs capability to cater to Defence, Space, Aerospace and Energy Sector provides an edge over the other market players and reduces dependence on a single product sector.

Strong financial position: MIDHANI has a strong financial position in terms of EBITDA margins which enables Company to invest in research and development while expanding its operations.

Weaknesses

Reliance on Defence and Space Sector: Defence and Space sector constitutes 65-70% of total revenue of MIDHANI which makes it vulnerable to shift in Government Policies.

Raw material supply chain constraints: MIDHANI is dependent on key critical minerals which are imported and are also instrumental in manufacturing process. Strained geo-political conditions pose a challenge before MIDHANI.

Lack of end product infrastructure: The Company lacks infrastructure for developing finished products which leads to low value addition.

Opportunities

Growth in the defence and aerospace sector: The defence and aerospace sector is witnessing significant growth and there is a greater demand for high-value products and services. Defence Acquisition Policy (DAP) 2020 emphasises on >50% indigenous content for a majority of the procurement categories and MIDHANI can capitalise on this opportunity.

Global expansion: MIDHANI can widen its global footprint and tap into new markets. This can be achieved through partnerships, joint ventures and acquisitions.

Diversify Sectors: Demand in associated sectors including aerospace manufacturing, space, electric vehicles, and railways to be tapped to obtain economies of scale

Threats

Intense competition: The Company faces intense competition from domestic and international players in the fields of Special Steels, Super-alloys and Titanium alloys. This puts pressure on the Company to continuously innovate and enhance its products and services.

Economic slowdown: Economic slowdowns can impact the demand for the Companys products and services, leading to reduced revenue and profitability.

Changes in government policies: Changes in government policies, such as changing import/export regulations, can impact Companys operations and revenue.

Mitigation of Supply chain risk: Procurement/supply chain risks are not evenly distributed amongst the suppliers for almost half of the raw materials procured

Review of operations:

MIDHANI manufacturers – high value special steels like Ultra High Strength Steel, Armor Grade Plates, Martensitic Steel, Austenitic Steel and Precipitation Hardening Steel, Super Alloys (nickel base, iron base and cobalt base) and varieties of Titanium alloys. MIDHANI has emerged as a ‘National Centre for Excellence in advanced metallurgical production for supplying critical alloys and products of national security and strategic importance. During FY 2022-23, MIDHANI developed C276 plates – a premier corrosion resistance materials for process industries, these were indigenously developed and resulted into import substitution. MIDHANI also developed Hastelloy X, which is typically used in Industrial Furnace applications and also widely used in many aircraft parts. MIDHANI has developed high performance material for construction of AUSC (Advanced Ultra Super Critical) plant which is a step toward catering requirement of high efficiency and high-performance thermal plant which will help in reduction of Green House Gas. MIDHANI has also inaugurated 6000T Isothermal Facility in the month of June 2023, which is highest capacity Isothermal Forge Press under Ministry of Defence, India.

MIDHANIs manufacturing locations

Hyderabad- MIDHANI is headquartered in Hyderabad, Telangana. It has a manufacturing units in Hyderabad that produce various products such as High Value Speciality Steel, Super Alloys (Nickel, Iron and Cobalt base) and Titanium alloys.

Rohtak: MIDHANI has a armor manufacturing unit in Rohtak, Haryana, that manufactures Armor products such as ‘MIDHANI kavach – a lightweight bullet resistant jackets manufactured using the ultra-molecular weight polyethylene fabric layers, Bullet Proof Vests, Vehicle Armouring, Helicopter Armouring and also supplies Armour Steel Products.

Manufacturing facilities

The primary and secondary melting furnaces at MIDHANI comprise Electric Arc Furnaces with Ladle Refining Furnaces, Vacuum Furnaces and more. Vacuum Induction Melting Furnace, Vacuum Induction Refining Furnace, Vacuum Arc ReMelting Furnace, Electro Slag Re-Melting Furnace and Electron Beam Melting Furnace are all examples of degassing/vacuum oxygen decarburisation processes. Depending on the output, form and sizes required, subsequent processes are performed at 6000T/1500T Forge Presses, Ring Rolling Mill, Hot Rolling and Cold Rolling Mills, Bar and Wire Drawing Mills, and so on. The Companys production procedures also include auxiliary supporting services, including conditioning, heat treatment, machining, pickling and quality control.

Product portfolio

The Company offers a wide range of products, which includes:

• Special Alloys (Ferritic, Austenitic, Martensitic, Maraging, Armour Steel).

• Super Alloys (Iron, Cobalt or Nickel-based).

• Titanium Alloys in the form of melted, forged, rolled and drawn products.

• Special Steels and Titanium Alloy Grades constitute a substantial portion of production tonnage.

Essential raw materials:

Titanium: MIDHANI produces Titanium alloys, which are widely used in aerospace and defence applications due to their high strength-to-weight ratio, corrosion resistance and ability to withstand high temperatures.

Nickel: Nickel finds wide application in the production of various alloys, including Inconel and Monel, which are used in high-temperature applications such as gas turbines, nuclear reactors and chemical processing plants.

Cobalt: Cobalt is used in the production of several alloys, including Stellite, which is used to manufacture cutting tools, valves and aerospace components.

Tungsten: Tungsten is also used to produce multiple alloys, including high-speed steels, which are used in cutting tools, dyes and moulds.

Zirconium: Zirconium is used in the production of nuclear reactor components, including fuel cladding and structural materials, due to its high corrosion resistance and low neutron absorption. Aluminium: Aluminium is employed for creating a wide range of alloys, including high-strength aluminium alloys used in aerospace and defence applications.

Copper: Copper is used in the production of various alloys, including brass and bronze, which are used in electrical components, marine applications and musical instruments.

Research and development

In FY23, the Company continued to implement R&D initiatives targeted at diversifying its product portfolio and strengthening its core competitiveness. The Company made prudent investments in R&D activities, including the development of new alloys and processes, while also improving its existing products. The R&D team at the Company collaborated with premium research institutions and universities to leverage new technologies and the expertise of leading scientists and researchers. This helped the Company develop cutting-edge products that gave it a competitive edge.

In the years ahead, the Company remains committed to investing in R&D initiatives to stay ahead of the curve and deliver sustainable value to its stakeholders. The Company recognises the importance of innovation in driving growth and is committed to building a strong R&D ecosystem that can help it achieve its long-term strategic objectives. By investing in R&D, the Company aims to cater to the evolving needs of its customers and sustain its leadership position in the specialised metals and alloys manufacturing industry.

The Summarized financial position for the Financial Year 2022-23 and for the two preceding Financial Years is given below:

(Figures in Rs Lakh)

Particulars	31-Mar-23	31-Mar-22	31-Mar-21
ASSETS:
Non-current assets
Property, Plant and Equipment	1,01,087.21	93,748.33	42,785.85
Capital work-in-progress	7,964.40	13,186.56	54,874.46
Intangible assets	463.00	100.42	105.72
Financial Assets
(i) Investments	2,210.11	2,210.11	2,210.11
(ii) Loans	-	1.59	35.60
Non-current tax assets (Net)	52.88	555.93	553.82
Other non-current assets	228.77	434.03	396.93
Total Non-Current Assets (1)	1,12,006.37	1,10,236.97	1,00,962.49
Current assets:
Inventories	1,22,484.37	1,09,149.16	80,083.79
Financial Assets
(i) Trade receivables	31,579.89	30,630.83	38,613.55
(ii) Cash and cash equivalents	1,441.54	6,258.15	9,394.67
(iii) Other financial assets	922.40	1,171.02	855.22
Other current assets	17,925.95	20,620.01	16,161.97
Total Current Assets (2)	1,74,354.15	1,67,829.17	1,45,109.20
Total Assets (1+2)	2,86,360.52	2,78,066.14	2,46,071.69
EQUITY AND LIABILITIES
EQUITY
Equity share capital	18,734.00	18,734.00	18,734.00
Other Equity	1,09,885.42	1,00,337.94	88,529.11
Total Equity (1)	1,28,619.42	1,19,071.94	1,07,263.11
LIABILITIES
Non-current liabilities
Financial liabilities
(i) Borrowings	6,735.67	2,775.88	-
(ia) Lease Liabilities	8,132.68	7,975.07	7,139.86
(ii) Other Financial Liabilities	94.53	84.54	-
Provisions	184.60	162.81	136.67
Deferred tax liabilities (net)	3,957.46	3,517.17	3,377.37

 

Other non-current liabilities	58,545.29	64,264.72	63,893.42
Total Non-current liabilities (2)	77,650.23	78,780.19	74,547.32
Current Liabilities
Financial liabilities
(i) Borrowings	31,999.63	23,981.88	16,043.55
(ia) Lease Liabilities	1,997.12	1,247.08	894.62
(ii) Trade payables
(A) Micro Enterprises and Small Enterprises	429.96	379.03	546.48
(B) Other than Micro Enterprises and Small Enterprises	15,499.37	17,209.13	8,010.23
(iii) Other financial liabilities	10,840.32	10,947.17	7,398.01
Other current liabilities	16,290.18	23,187.18	26,928.32
Provisions	3,034.29	3,262.54	4,440.05
Total Current Liabilities (3)	80,090.87	80,214.01	64,261.26
Total Equity and Liabilities (1+2+3)	2,86,360.52	2,78,066.14	2,46,071.69
Working Capital	94,263.28	87,615.16	80,847.94
Capital Employed	1,35,355.09	1,21,847.82	1,07,263.11
Net Worth	1,28,619.42	1,19,071.94	1,07,263.11
Net worth per rupee of paid-up capital (H)	6.87	6.36	5.73

MOU 2022-23 PERFORMANCE AND WORKING RESULTS:

For FY 2022-23, MIDHANIs MoU performance is expected to qualify for an overall "Very Good" rating. The rating is subject to evaluation and confirmation by Department of Public Enterprises.

The performance of your company against various parameters was as under:

S. No.	Name of the Parameter	Unit	Target	Actual
1	Value of Production	H In Cr	1205	1100.27
2	CAPEX	H In Cr	175	75.81
3	Export/Income From overseas	H In Cr	100	37.45
4	Reduction in total imports as % of Revenue from operations over previous year	%	13.49	-5.82
5	EBITDA as % of revenue	%	33	32.46
6	Return on Networth	%	17.83	12.60
7	Asset Turnover Ratio	%	44.12	31.77
8	Acceptance/ Rejection of goods & Services through TReDS portal	%	100	100
9	Procurement from GeM as % of total procurement	%	25	29.84
10	Trade Receivables as number of days of Revenue from Operations	No. of Days	90	132
11	Expenditure on R&D Innovations initiatives as % of PBT	%	7.24	9.36

The Total Return to Shareholders (TRS) during FY 2022-23 stood at 13.43%.

	(Market cap. at end of FY - Market cap. at end of Previous FY)
	+ Dividend Paid + Dividend/ Interest/ Redemption of Bonus Pref. Shares or Debenture, etc.
Total Return to shareholder =		?100
	Market cap. at the end of Previous FY

The significant highlights of the performance for financial year 2022-23 and comparison with the previous two years is as under:

(Figures in Rs Lakh)

S. No.	Particulars	2022-23	2021-22	2020-21
1	Sales - To Customers	87,194.14	85,949.02	81,323.08
	Sales – Export	3,744.53	8,702.16	1,942.47
2	Value of Production	1,10,026.63	1,01,358.59	82,939.16
3	Cash Profit	26,955.37	27,211.51	25,308.92
4	Profit Before Tax (Excl. OCI)	21,654.92	23,911.98	22,609.39
5	Net Profit (PAT) (Excl. OCI)	15,587.61	17,630.77	16,629.15
6	Value Added	70,908.96	66,868.27	60,157.17
7	Value added per employee	94.42	86.84	79.05
8	Productivity per employee	146.51	131.63	108.99
9	Value added per direct worker	184.18	180.24	195.32
10	Paid up Capital	18,734.00	18,734.00	18,734.00
11	No. of Employees	751	770	761

Some of the important financial ratios indicating financial health and working of the Company at the end of last three years are as under:

(Figures in % unless specified)

S. No.	Particulars	2022-23	2021-22	2020-21
A.	Current Ratio	2.18	2.09	2.26
B	Profitability Ratios
a)	Profit Before Tax to :
	i) Capital Employed (%)	16.00	19.62	21.08
	ii) Net worth (%)	16.84	20.08	21.08
	iii) Sales (%)	24.84	27.82	27.80
b)	Profit After Tax to Equity (%)	83.20	94.11	88.76
c)	Earnings Per Share (in Rupees)	8.32	9.41	8.88

The other key Financial Ratios are as under:

S. No.	Particulars	FY 2022-23	FY 2021-22	Change in % as compared to FY 2021-22	Detailed explanation for change of 25% or more
1.	Debtors Turnover	2.80	2.48	12.90%	-
2.	Inventory Turnover	0.57	0.66	-13.64%	-
3.	Interest Coverage	11.48	13.66	-15.96%	-
4.	Current Ratio	2.18	2.09	4.31%	-
5.	Debt Equity Ratio	0.30	0.22	36.36%	Due to availing CAPEX loan and increase in working capital requirement.
6.	Operating Profit Margin (%)	20.50	24.18	-15.22%	-
7.	Net Profit Margin (%)	17.88	20.51	-12.82%	-
8.	Return on Networth (%)	12.59	15.58	-19.19%	-

Amount available for Appropriation:

The amount available for appropriation is H 15,587.61 Lakh as against H 17,630.77 Lakh in the previous year.

Risks and concerns:

Risk type	Risk definition	Risk probability	Risk impact	Risk mitigation
Market risks	The Government and the parent company or its subsidiaries, form a larger portion of MIDHANIs customer base. The current or projected strategic programmes may be impacted by changes in government priorities.	M/L	H	To mitigate market risks, MIDHANI can diversify its product portfolio, enter new markets and hedge against commodity price fluctuations.
Operational risk	Operational risks arises from inadequate or failed internal processes, systems, human errors or external events.	H	H	To address operational risks, the Company implements robust quality control measures, invests in technology and automation and establishes contingency plans to manage unexpected events.
Financial risk	Financial risks occur due to unfavourable financial conditions pertaining to liquidity, credit, interest rates and foreign exchange risks.	M/H	H	To mitigate financial risks, the Company maintains a healthy balance sheet, diversifies its funding sources.
Environmental risk	Environmental risks involve the risks arising from pollution, climate change and natural disasters.	L/M	H	To mitigate environmental risks, MIDHANI adopts sustainable practices, complies with environmental regulations and implements emergency response plans.
Reputational risk	Reputational risks could damage the Companys stature due to unethical behaviour, product recalls or negative publicity.	L/M	H	To mitigate reputational risks, the Company has a robust code of ethics. It also conducts regular training on compliance and ethical behaviour.

H: High; M: Medium; and L: Low

Human resources

As of March 31, 2023, MIDHANI has 751 permanent employees, including 29 newly hired personnel (12 executives and 17 non-executives cadre) with an average age of 39 years. Strengthened by its present talent pool, the business is well-positioned to handle challenging projects and meet the highest quality standards that satisfy customer needs. The primary focus is on improving operational efficiency to enable seamless interdepartmental communications and collaboration.

The Company has successfully spent 2855 man days in training during the year under review as reported by its Training and Development department. A three-day training programme, ‘DARPAN, for NUS cadre was conducted with 32 participants from various cross-functional departments. It was a mission to re-fire, explore, excel, enhance and enlight. Training was given on account of happiness management, health management, spiritual management, emotional management and work-life-balance.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

MIDHANI has established a framework for internal controls, commensurate with the size and nature of its operations. The internal control system is supplemented by an extensive program of internal audits and their reviews by the management. The in-house internal audit function supported by professional external audit firms conduct comprehensive risk focused audits and evaluate the effectiveness of the internal control structure and functions on a regular basis.

The Company has laid down internal financial controls as detailed in the Companies Act, 2013. These have been established across the levels and are designed to ensure compliance to internal control requirements, regulatory compliance and appropriate recording of financial and operational information.

External Audit firm Eswar & Co. were engaged to carry out Internal Audit during the year under report, which ensure adequacy of systems and controls. Their reports thereon were further reviewed by the Audit Committee. In addition, the In-house Internal Audit team also regularly carries out audits of specific processes. Internal Audit Reports along with corrective actions initiated are discussed with the Management and were reviewed by the Audit Committee. The Audit Committee also reviews the adequacy and effectiveness of internal controls._