Nagpur Power & Industries Ltd Management Discussions.
Management Discussion and Analysis
a) Economy review:
The long-term growth perspective of the Indian economy is changing due to continued investments in infra in Transmission and Distribution, railways and metros, lighting and digital initiatives. Stable policies and good initiatives like smart cities. Your Company (through its Subsidiary) is in the business of manufacturing electrical equipment, a significant portion of which is supplied to the power sector which has continued to be affected by the political & economic situation. We hope to see a gradual recovery.
b) Business and Industrial review and future outlook:
The Company mainly operated on Metal Recovery Plant and produces Low Ferro Manganese (Slag) through its slag recovery process. However, the re-useable waste of fine particles remaining in the manganese slag which was dumped at various places at the factory site is depleting and it is uncertain how much slag is left. The technical consultants are also of the same view.
The management of the Company has foreseen this & thus entered another segment of business couple of years earlier via a majority stake in "The Motwane Manufacturing Company Private Limited", now a subsidiary company and is looking to develop its business in electrical sector. The company is also looking at other business opportunities including monetizing its assets and redeployment of the same in better business opportunities.
c) Risks, Concerns & Threats:
Depletion of slag dumps posed a major problem for the Company. In order to counter this, the Company entered into another business through its subsidiary company "The Motwane Manufacturing Company Private Limited" and is looking to develop it. The Management of the Company meets frequently to take the stock of all the impending and immediate threats to the business and takes necessary steps for positioning of the Company to meet the same in time. Any major threats affecting the Company in general and business environment indirectly affecting the functioning of the Company are discussed with the Board from time to time.
d) Internal Control Systems:
The Company has adequate internal control systems in place with reference to the financial statements. The Audit Committee of the Board periodically reviews the internal control systems with the management, Internal Auditors and Statutory Auditors and the adequacy of internal audit function, significant internal audit findings and follow-ups thereon.
e) Financial Performance / Overview of Operations:
During the year under review, the revenue from operation of the Company increased to र 46.69 Lakhs from र 15.48 Lakhs in the previous year.
Subsidiary Company and Consolidated Statements
Your Company has one subsidiary i.e The Motwane Manufacturing Company Private Limited (MMCPL). During the financial year 2018-19, total revenue of the MMCPL has increased to र 40.69 crores from र 29.81 crores in the previous financial year and the net profit of the Company has increased to र 89.10 Lakhs from र 6.66 Lakhs in the previous financial year.
The Consolidated Financial Statement of your Company for the financial year 2018-19, are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standard and SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015. The Consolidated Financial Statements have been prepared on the basis of audited financial statements of the Company, its subsidiary, as approved by their respective Board of Directors.
Pursuant to sub-section (3) of section 129 of the Act, the statement containing the salient features of the financial statement of Companys subsidiary is given as AOC -1. Brief particulars about the business of the Subsidiary are given hereunder.
MMCPL is an R & D based company and has developed various high technology test and Measurement products which have applicability in the domestic and international markets. The companys products are sold primarily to the power sector and energy intensive industries. The company expects gradual pick up in its order book due to growth and reform in the distribution sector in which the company operates. Alternatively, it is exploring its potential in the IOT space in adjacent areas like smart lighting and other IOT related industrial solutions.
f) Material developments in human resources / industrial relations, including number of people employed
The human resource plays a vital role in the growth and success of an organization. The Company has maintained cordial and harmonious relations with employees.
During the year under review, various training and development workshops were conducted to improve the competency level of employee with an objective to improve the operational performance of individuals. The Company has built a competent team to handle challenging assignments and projects.
The Company has 19 permanent employees as on March 31, 2019.
g) Details of Significant Changes
|Debtors turnover ratio||-||-|
|Interest coverage ratio||(65.10)||(15.86)|
|Debt equity ratio||0.004||0.003|
|Operating margin ratio||(1.79)||(183)|
|Net profit margin %||(182)%||(246)%|
|Return on Networth %||(1.18)%||(0.53)%|
|Return on Net worth %||(57.31)||(124.14)|
Reason for significant change:
The interest coverage ratio has come down to (65.10) due to loss incurred by the company during the year. However the management is of the view that the losses are due to Ind AS effect wherein the notional losses of current investments have been factored in and the Company has adequate cash flow to service the interest.
The debt has increased marginally and the company has a comfortable debt equity ratio of 0.004.
The net loss margin has decreased due to increase in sales as compared to last year. However the managements contention is that it is due Ind AS effect wherein the notional losses of current investments have been factored in.
The negative earnings per share have increased from (0.29) to (0.65) per share i.e. there is an increase of 124% due to the increased losses by the Company in the current year. The negative EPS is mainly on account of notional losses of current investments as per Ind AS and as such is of transitional nature.
h) Details of any change in Return on Net Worth as compared to the immediately previous financial year
Due to increase in loss for the current year the return on net worth i.e. the return on shareholders equity has gone down by 124%. The management has reiterated that since the net losses are mainly due to the Ind AS affect the negative EPS is of transitional nature.
|For and on behalf of the Board|
|Place: Mumbai||Gautam Khandelwal|
|Date: July 30, 2019||Chairman|