1. ECONOMIC REVIEW
1.1 GLOBAL
Despite witnessing major challenges in 2022—Omicron, conflict
between Russia and Ukraine, extraordinary global monetary tightening, and the China
slowdown—the global economy did better than expected. The Euro area steered clear of
deep economic contraction while the US economy remained more resilient than expected.
Strong private sector balance sheets provided a meaningful buffer against a significant
downturn in 2022. Global economic growth slowed down to 3% in 2023 as per International
Monetary Fund (World Economic Outlook Apr 2023) compared to 3.5% in 2022. The central
banks aggressively tighten their monetary policy, which further impacted economic
activity. 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% in 2022 to 6.8
% in 2023. That said, as inflation is expected to remain above central banksRs targets,
policy rates will remain higher for longer.
Soucrce: IMF - World Economic Outlook, April 2023
1.2 OUTLOOK
Analysts estimate that 2023 will continue to see the above issues
playing out leading to a further slowdown in economic growth and a mild recession in the
UK as well as potentially in the Euro area. The UK has been impacted by an increase in
cost-of-living, dampening householdRs s purchasing power and consumption, as well as
tighter fiscal and monetary policy. Current estimates project global recovery in the
second half of 2023, with moderation of inflation and re-opening of the Chinese economy.
We have already started seeing cooling-off of fuel and commodity prices as well as global
container freight rates. However, risks remain to this outlook with the stress seen in
banking systems in the US and Europe in the last few months, potentially getting
aggravated with extended high inflation levels and triggering further rounds of rate hikes
and adversely impacting the business environment. There is also continued uncertainty on a
resolution of the Russia- Ukraine conflict further impacting energy markets and disrupting
the supply demand balance.
1.3 INDIAN ECONOMY
As per IMFRs s latest World Economic Outlook report (April 2023),
IndiaRs s growth is expected to slow down to 6.1% in 2023-24 from 6.8% in 2022-23
(estimated) due to tightening financial conditions and global headwinds. Still, IndiaRs s
growth outlook remains solid on strong domestic fundamentals such as a relatively low
level of inflation compared to the DMs, a prudent monetary and fiscal policy mix and as a
consequence of several reforms carried out in recent years, in addition to political
stability. Indeed, India will continue to be the fastest growing major economy for the
third consecutive year. Despite global volatility, the Indian economy grew by 6.8% in 2022
- making it the fifth largest economy globally in terms of nominal GDP (US dollars). This
growth has been supported by:
(1) reduction in Covid-19 cases leading to opening up of the economy;
(2) expansion of manufacturing footprint by both global and Indian
firms, aided by Government policies (eg Production Linked Incentive (PLI) Scheme, PM Gati
Shakti, corporate tax cuts);
(3) capex recovery; and
(4) cyclical upturn in many sectors (eg Banking, Auto). IndiaRs s
digital infrastructure has strengthened in the last few years and the widespread adoption
of real-time digital payments is estimated to have unlocked 0.56% of GDP. IndiaRs s growth
outperformance is expected to lead to strong domestic demand, partially offsetting the
impact of global headwinds. Consumption growth will remain healthy, supported by a
sustained recovery in consumer services (retail sales, hotels and restaurants, transport
and communications); an improvement in labour market conditions, particularly in the
formal sector; increasing consumer confidence; an expected recovery in rural demand; and
higher purchasing power with moderating inflation. The investment cycle is expected to
strengthen further, supported by higher private capex and the GovernmentRs s continued
focus on capital spending. A pickup in private capex will be led by healthier balance
sheets of companies and banks along with improving capacity utilization in manufacturing.
While slowing global growth will drag exports, IndiaRs s rising share in global
manufacturing exports will provide some cushion as will the growth in services exports.
Key risks to IndiaRs s growth outlook include a significant tightening in financial
conditions to contain high inflation, a sharp rise in commodity prices and protracted
recessionary tendencies in DMs.
Soucrce: IMF - World Economic Outlook, April 2023
1.4 OUTLOOK
According to the International Monetary Fund, Indian economy is
projected to deliver robust growth of 5.9% for 2023, highest amongst the emerging
economies, driven by strong domestic demand and healthy consumption growth supported by an
improvement in labour market conditions, increasing consumer confidence, an expected
recovery in rural demand and higher purchasing power with moderating of inflation. In the
Union Budget for FY2023-24, the government announced a 33% increase in capex allocation to
INR 10 trillion, which is expected to boost private investments. The Budget has also
targeted a lower fiscal deficit in FY2023-24 at 5.9% and the government has committed to
bring it down to below 4.5% by FY2025-26. Risks to the outlook remain with weakness in the
global economy impacting exports, volatility in food and crude oil prices, slowdown in
private consumption and aggressive monetary tightening by global central banks to moderate
inflation.
IMF - World Economic Outlook, April 2023
RAILWAY INDUSTRY
A major transport infrastructure, that can very well be called IndiaRs
s lifeline, and which had a huge role to play in national integration and regional
development, is the railways. Indian Railways (IR) is the fourth-largest network in the
world, Only behind US, Russia and China, with more than 68,031 route kilometres run by a
single management. 2022-2023 saw the completion of 5243 km of track, as compared to 2902
km in 2021-2022. The daily average rail laying increased to 14.4 km which was the highest
commissioning ever. The railways run 9,146 freight trains and 13,523 passenger trains per
day. In FY 22-23, Indian Railways loaded 1512 MT of freight, setting a record. Under the
Vision 2024 targets of 2024 MT freight loading by 2024 has been envisaged. With 1.3
million employees, Indian Railways ranked eighth globally and first in the country
becoming its top employer. The Indian Railways consists of a total track length of 126,366
km with 7,335 stations. 5243 km of track length was achieved during 2022-23 as compared to
2909 Kms during 2021-22. Indian Railways records best ever February monthly freight
loading of 124.03 MT during 2022-23 following the Mantra, "Hungry For Cargo",
Indian Railways has made sustained efforts to improve the ease of doing business as well
as improve the service delivery at competitive prices which has resulted in new traffic
coming to railways from both conventional and non-conventional commodity streams. The
customer centric approach and work of business development units backed up by agile policy
making has helped the Railways breach the 1400 MT Freight Loading mark for 1st
time ever. Indian Railways has registered highest ever Freight Loading in any Financial
year with 1512 MT freight loading in FY 2022-23. The railway sector in India aims to
contribute about 1.5% to the countryRs s GDP by building infrastructure to support 45% of
the modal freight share of the economy. Indian Railways has achieved record
electrification of 6,542 RKMs in history during FY 2022-23. As of July 2023, 12 Vande
Bharat Express and 4 Tejas Express services are being operated by Indian Railways. During
2022-23, 538 No. of stations were provided Electronic Interlocking as compared to 421 No.
of stations during 2021-22, an increase of 27.79% Under the Union Budget 2023, Indian
Railways has been allocated a highest ever capital outlay of $29 Billion. India is
projected to account for 40% of the total global share of rail activity by 2050. To
achieve this, the Indian Railways has solarized more than 1000 stations. Electrification
of 1,973 Route km (2,647 TKM) was achieved during 2022-23, which is 41% higher as compared
to corresponding period of 2021-22.
The railway industry is intrinsically correlated to the Indian
RailwayRs s spending and has become increasingly indigenous over the years. Indian
Railways plans to float tender worth Rs 25,000 crore to procure 60,000 freight wagons
which may include a tender to procure 10,000 aluminium wagons in July-September. Indian
RailwaysRs also plans to increase the share of freight traffic carried by rail from the
current share of 27 percent to 45 percent by 2030. Indian Railways is looking to launch a
premium cargo service using aluminium rakes, which will not only be faster than
conventional rakes but will also help manufacturers toward their environmental, social and
governance (ESG) norms. Government of India plans to deploy more than 1 lakh wagons in the
coming years to increase freight loading to 2,000 million tonnes (MT) by 2024-25.
GovernmentRs s decision to allow 100% foreign investment in railway infrastructure has
capacity to change industry dynamics and overall efficiency. Increasing urbanization,
rising income and introduction of metros in urban areas is driving growth in the passenger
segment. The GovernmentRs s thrust on Capital expenditure, particularly in the
infrastructure-intensive sectors like roads and highways, railways, and housing and urban
affairs, has longer-term implications for growth. Railway industry outlook the mid- to
long-term factors remain strong, supported by a slew of expansion and upgradation projects
being undertaken by the Indian Railways. The government is looking at increased interest
in the form of foreign direct investment and public- private partnerships, which set the
industry on a strong growth trajectory. With the rapid pace of urbanization and
modernization in India, the future seems bright for the Railway Industry.
INDUSTRY STRUCTURE & DEVELOPMENTS
Oriental Rail Infrastructure Limited (Formerly known as Oriental Veneer
Products limited) (Rs ORILRs ), a 32 year old organization, is one of the few companies in
India that is engaged in the manufacturing and supply of several diversified railway
products/items for Indian Railways and other related industries.
Being the trusted supplier of the Indian Railways, we are supporting
with our cutting-edge, technology-driven products through modernization efforts. Our
world-class research and design facility, and collaborations with leading technology
providers aid us in creating a niche for ourselves in providing safe and reliable
products.
ORIL has played a significant role in infrastructure development of
Indian Railways by investing in the modernization of manufacturing of several diversified
railway products/items and generate more revenue. Over the years, ORIL has developed a
very strong relationship with the railways. In fact, the Company is a Preferred Part I
Vendor to the Indian Railways. All the products developed by ORIL for Indian Railways are
approved by the Research Designs Standards Organisation (RDSO) which is the sole vendor
approving body for the Railways. The products are also RITES certified, which is the sole
inspecting authority for ensuring quality and clearance of all products supplied to Indian
Railways.
The company manufactures several products consumed not just by the
Indian Railways but many other industries as well such as Seat & Berth, Densified
Thermal Bonded Block (DTBB), Compreg Board & Allied Products, ORVIN, Recorn, Coated
Upholstery Fabric, Furniture & Parts, Plywood and Phenolic Resin & Hardener,
Rubber floor.
The Company has modernized Artificial Leather (Rexene) plant and it
will expand the capacity of production from 24 Lac meter to 48 Lac meter per annum. It
will upgrade the existing products which will help the Company to capture the consumer
market, automobile sector and export globally.
The Company is focused in invest in a new manufacturing facility and on
expanding production capacities at existing plants.
ORIL are also focused on developing new products and innovating and
upgrading its products.
With advanced Technology, and with great research, we are also focused
to expand the production of Silicon Foam Blocks which is used as a cushioning material for
manufacturing Seat and Berths specialized for Railway coaches.
ORIL & its subsidiary OFPL has emerged as a Total Rail Solution
provider, equipped with the latest products & technologies.
SUBSIDIARY
Oriental Foundry Private Limited (OFPL)
The Wholly owned Subsidiary of the Company i.e. OFPL is into
manufacturing of bogies, couplers and Wagons.
OFPL has acquired approximately 27 acres of industrial land at
Lakadiya, Gujarat and has set up second plant to assist your Company in expanding its
footprint in the new segments of Heavy Engineering of Rolling Stock i.e. Wagon used by
Indian Railways and many other Industries. OFPL has set up two new manufacturing plants
Bogie spring plant in Kutch, Gujrat and Bogie and Coupler manufacturing plant in
Chopadava. And also expanded a manufacturing capacity for Wagons at its Plant at Lakadiya,
Gujrat. New Bogie spring plant manufactures spring for a Bogie and its yearly capacity is
2,80,800 Nos. Our new Bogie and Coupler plant will result in double the capacity of
manufacturing Rs BogieRs and Rs CouplerRs and will cater the demand of Indian Railways.
The Capacity of Wagon plant enhanced the existing capacity of
production of upto Rs 2,400 WagonsRs per year. These capacity expansion provided
significant opportunity to our Foundry section which helps to curb the gap of short supply
of Wagons to Indian Railways.
OFPL in FY 2022-23 revenue is Rs 19,768.36 Lakhs and Net Profit
at Rs 88.64 Lakhs.
During the year, OFPL Secured order worth Rs 1,211.89 crores
from Rs Indian RailwaysRs for manufacturing and supplying Rs WagonsRs .
PRODUCT-WISE PERFORMANCE:
The company manufactures several products consumed not just by the
Indian Railways but many other industries as well such as Seat & Berth, Recorn,
Compreg Board & Articles thereof, Furniture & Parts, Coated Upholstery Fabric,
Plywood, Phenolic Resin & Hardner, Silicon Foam, etc.
Railway Seat & Berth
The turnover from Seat & Berth for the FYRs 23 stands at Rs 104.03
Crores (the figure excludes GST).
Our Company has a great opportunity to get an orders from Indian
Railways as Government is focused on Developing Indian Railways.
The Indian Railways consists of a total track length of 126,366 km with
7,335 stations. 5243 km of track length was achieved during 2022-23 as compared to 2909
Kms during 2021-22. Indian Railways records best ever February monthly freight loading of
124.03 MT during 2022-23.
Upcoming new coaches in future will increase the requirement of Seat
& Berth which will double the supply.
ORIL enjoy over 30% market share in seats & berths.
Other Products
The turnover from Recorn, Compreg Board & Articles thereof,
Furniture & Parts, Coated Upholstery Fabric, Plywood, Phenolic Resin & Hardner,
Silicon Foam, etc. is Rs 27.35 crores (the figure excludes GST).
Product-wise performance
| Detail of Products sold (Net) |
Products-wise revenue for the FY 2022-23
(Rs in lakhs) |
| Seat & Berth |
10,403.07 |
| Recorn |
286.73 |
| Compreg Board & Articles thereof |
442.63 |
| Furniture & Parts |
17.19 |
| Coated Upholstery Fabric |
499.38 |
| Plywood |
490.36 |
| Phenolic Resin & Hardner |
610.03 |
| Silicon Foam |
131.73 |
| Others* |
257.49 |
| Total |
13,138.60 |
RESEARCH AND DEVELOPMENT
To realise our aim we have a strong and well-equipped Research &
Development lab. R&DRs s contribution in ORILRs s growth has been noteworthy. The
Company recognizes the need for value addition in products and our vision is to introduce
innovative products.. It has helped the Company to grow its business and expand its market
presence through better service, quality and timely delivery of products. R&D has
played a critical role in bringing down the costs, adopting new technologies for
monetization and ensuring that the Company maintains its competitive edge.
OPPORTUNITIES
The government of India has been consistently focusing upon enhancing
the roads and railways network throughout the country. As per data the Government has
taken following initiatives:
• Under the Union Budget 2023, Indian Railways has been allocated
a highest ever capital outlay of $29 Billion .
• Mumbai-Ahmedabad High Speed Rail (MAHSR) Project: The MAHSR
project, which was sanctioned by the government in 2015, with technical and financial
cooperation from Government of Japan, is under execution and survey & design aspects
of it have been finalized.
• Induction of semi-high-speed Vande Bharat Train Sets: Semi
High-Speed Self-Propelled Vande Bharat Trainsets were manufactured by Integral Coach
Factory, Chennai, with indigenous efforts.
• To realise the vision of Atmanirbhar Bharat, 2,000 km of railway
network will be brought under KAVACH for safety and capacity augmentation in 2022-23
• GatiShakti Multi-Modal Cargo Terminal (GCT): GCTs are being
developed by private players on non-railway land as well as fully/ partially on railway
land, based on demand from industry and potential of cargo traffic. 21 GCTs have been
commissioned and more than 90 more locations have been provisionally identified for
development of GCTs (as of 31 October 2022). This will boost investment from industry in
the development of additional terminals for handling rail cargos.
• Complete electrification of all railway networks by 2023 using
three-phase technology for regenerative braking, use of renewable sources of energy and Rs
head on generationRs technology to eliminate the need for diesel-fuelled power cars and
create carbon sink for afforestation.
• Under the Gati Shakti scheme, 400 new Vande Bharat trains and
100 new cargo terminals have been introduced, mentioned in the Union Budget 2022-23.
• The Indian Railways has operated 1,841 Kisan Rail services,
transporting approximately 6 lakh tonnes of perishables including fruits and vegetables.
• Indian Railways is developing and creating technology in areas
such as signaling and telecommunication with 15.000 kms being converted into automatic
signaling and 37.000 kms to be fitted with Rs KAVACHRs , the domestically developed Train
Collision Avoidance System
The ambitious plan of the Government has also triggered the demand for
Railway Seat & Berth, modern hi-tech wagons, Bogies and Coupler where youRs re Company
has already established a strong presence.
With such unprecedented opportunities thrown up in the wake of massive
ongoing expansion plans of Railways, the major challenge to your Company is to beef up its
own resources in terms of organisation, financial wherewithal and supply chain management,
etc. The Companystop brass management is fully seized of it and is committed to deliver.
In this hugely inspiring backdrop, it is no less important that the Government of India
must have a stable policy for sustained engagement of the private sector, and it should
eschew any flip-flop policy which tends to dampen the long-term plans of the private
sector.
THREATS
• As the Indian railway is the largest buyer of the
Companysproducts, any change in policies of Indian Railways whether positive or negative,
has a direct impact on the Companysbusiness.
• As uncertainties prevail in the global economy, the industry
continues to face a range of business risks related to supply chain and changing customer
preferences. Delay in economic recovery, increase in price of Raw material are some of the
headwinds being confronted. Moreover, evolving regulatory and trade environment,
technological changes and environmental regulation continue to pose challenges to the
sector.
Risk and Concerns
| Dependence Risk |
The Companysbusiness and its revenues are substantially
dependent on the policies of the Ministry of Railways and operations of Indian Railways.
Any policy change or any adverse decision may affect the revenue of the Company for e.g.
in 2016 the decision to scrap service fee affected the Companysrevenue. |
| Competition Risk |
The GoI or the Ministry of Railways opens up the market for
private players. Intense competition may have an adverse impact on the Companysoperation
and profitability |
| Human Resource Risk |
The Company operates in a labour intensive industry and hires
contract labour to provide certain services. Worker strikes or demand for increased wages
and benefits may adversely affect the profitability of the Company. |
| Raw Material Price Risk |
As uncertainties prevail in the global economy, the industry
continues to face a range of business risks related to supply chain and changing customer
preferences. Delay in economic recovery, increase in price of Raw material are some of the
headwinds being confronted. Moreover, evolving regulatory and trade environment,
technological changes and environmental regulation continue to pose challenges to the
sector |
INTERNAL CONTROL SYSTEMS
The Company has a defined system of internal controls for financial
reporting of transactions and compliance with relevant laws and regulation commensurate
with its size and nature of business. The Company also has a well-defined process for
ongoing management reviews and periodic interview of businesses as key operational
controls wherein the performance of divisions is reviewed against budgets and corrective
actions are taken to ensure alignment with strategic objectives.
The Audit Committee regularly reviews the audit findings as well as the
adequacy and effectiveness of the internal control measures. Based on their
recommendations, the Company has implemented a number of control measures both in
operational, internal control and accounting related areas, apart from security related
measures.
FINANCIAL PERFORMANCE
Standalone
The CompanysStandalone revenue from operations for FY 2022-23 was ?
13,453.12 Lakhs, compared to ? 11,289.96 Lakhs in the previous year. The Companysprofit
before exceptional items and tax on a standalone basis was ? 317.52 Lakhs during the year
compared to ? 1,773.07 Lakhs in the previous year. The Company earned a net profit of ?
230.08 Lakhs during the year compared to ? 1,306.05 Lakhs in the previous year.
Consolidated
The Companysconsolidated revenue from operations for Financial FY
2022-23 was ? 32,512.83 Lakhs compared to ? 17,259.90 Lakhs in the previous year. The
Companysprofit before exceptional items and tax on a consolidated basis was ? 428.81
Lakhs during the year compared to ? 2,079.66 Lakhs in the previous year. The Company
earned a net profit of ? 318.72 Lakhs during the year compared to Rs 1,558.81 Lakhs in the
previous year.
KEY FINANCIAL RATIOS
|
Standalone |
Consolidated |
| indicators |
FY 2022-23 |
FY 2021-22 |
FY 2022-23 |
FY 2021-22 |
| Debtor Turnover |
3.33 |
2.55 |
4.13 |
2.96 |
| Inventory Turnover |
0.22 |
0.21 |
0.57 |
1.56 |
| Interest Coverage Ratio |
0.58 |
0.09 |
0.79 |
5.15 |
| Current Ratio |
1.18 |
1.91 |
1.38 |
1.72 |
| Debt Equity Ratio |
0.35 |
0.25 |
2.91 |
1.71 |
| Operating Profit Margin |
3.11 |
16.39 |
3.39 |
17.52 |
| Net profit Margin (%) |
1.71 |
11.57 |
0.98 |
9.03 |
| EPS (?) |
0.43 |
2.42 |
0.59 |
2.89 |
| Return on Net worth |
2.49 |
14.50 |
2.96 |
14.95 |
HUMAN RELATIONS
As on March 31, 2023, your Company had 152 employees. Our culture
enables us to attract & retain some of the best talents. We are guided by our value
system which determines our attitudes & actions.
Our strategic objective is to build a sustainable organization which
remains relevant to our clients, while creating growth opportunities for our employees and
generating profitable growth for our investors.
Employees are our most important assets. We believe that the quality
& level of service that our employees deliver are among the highest.
INVESTOR RELATIONS
We constantly endeavour to improve our services standards for our
investors and benchmark our performance against best practices. We have a dedicated
investor relations desk, which serves the interest of the investing community, through
regular contact and timely communication - engaging shareholders in ongoing management
meetings. We conducted periodic plant visits and meetings to communicate details of our
performance and important developments, and exchange information.
We ensure that all critical information about us is available to all
investors by uploading such information on our website (www.orientalrail.coml,
containing a dedicated "Investor Relations" section where relevant information
is available, including information on the Directors, shareholding pattern, quarterly
reports, financial results, annual reports, press releases, details of unpaid/unclaimed
dividends and various policies.
CAUTIONARY STATEMENT
In this annual report some future developments which are expected to be
implemented have been given. This has been done with a view to help investors better
understand the Companysfuture prospects and make informed decisions. This annual report
and other written and oral statements made from time to time may contain such
forward-looking statements based on managementRs s current plans and assumptions. It
cannot be guaranteed that any forward-looking statement will be realised, although, we
believe, we have been prudent in our plans and assumptions. Achievement of future results
is subject to risks, uncertainties and inaccurate assumptions. Should Rs knownRs or Rs
unknownRs risks or uncertainties materialise, or should the underlying assumptions prove
inaccurate, actual results could vary materially from those anticipated, estimated or
projected. Investors should bear this in mind when they consider forward-looking
statements. We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
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