panchmahal steel ltd share price Management discussions


Industry Structure, Developments

The Company is primarily engaged in the manufacture of stainless steel long products in the form of wire rods, bars and wires, which find application in a wide range of applications in engineering, construction and infrastructure, automotive and railways, consumer durables, food processing and dairy industry, housing and pharmaceuticals.The infrastructure development in India is steadily increasing the demand of stainless steel usage.

Performance

The Company recorded total income of Rs.577.61 crores as compared to Rs.343.32 crores in the previous year. The Company achieved a Profit after Tax for the year of Rs.58.58 crores as against Rs.9.81 crores in the previous year.

Opportunities, Threats, Risk & Concerns

The Company is an established and recognised producer of stainless steel long products with customers around the world. The Companys philosophy of focussing on value added products and expanding the customer base provides the necessary resilience to successfully overcome challenges through different parts of the business cycle. The Company is confident of high quality and sustainable growth and profitability.

Increasing awareness on the benefits of stainless steel is leading to substantial increase of its usage in railways, public transport systems, automobiles, process industries, building & construction, FMCG etc.

Risk is inherent in every business. The steel industry is deeply connected to the global economy. Changes in the demand and supply scenario can cause disruptions in the global markets. Volatility in the raw materials prices can also be cause for concern. However, the company is capable of responding to the changing situations appropriately.

Outlook for the year 2022-23

The future outlook of the Company looks good. The demand for stainless steel continues to grow. However, there are challenging business environment on account of global energy crisis, inflation and geopolitical tensions between nations. These situations create uncertainties which needs to be managed as per the prevailing conditions. Your Directors are confident that the Company is capable of facing such challenges and of continuous growth.

Changes in Key Financial Ratios

The change in the key financial ratios as compared to previous year is stated below:

Name of Ratio F.Y. 2021-22 F.Y. 2020-21 Change % Reason for variation
Current Ratio (No. of times) 1.70 1.19 43% On account of reduction in Borrowing and Payables.
Debt-Equity Ratio (No. of times) 0.18 0.54 -67% On account of repayment of Term Loan & reduction in Bank Borrowing.
Debt Service Coverage Ratio (No. of times) 24.95 3.74 567% On ac count of in creasing Operating Profit & reduction in Borrowing.
Return on Equity 44.78% 10.14% 341% On account of increase in Turnover and reduction in Finance Cost.
Inventory Turnover Ratio (No. of times) 3.65 2.42 -50% On account of increase in Turnover and better Operating performance.
Trade Receivable Turnover Ratio (No. of times) 15.42 11.60 33% On account o f better performance
Trade Payable Turnover Ratio (No. of times) 4.77 3.23 48% On account of better performance.
Net Capital Turnover Ratio (No. of times) 6.33 10.74 -41% On account of increase in Sales in current year and reduction in Working Capital requirements.
Operating Profit Margin Ratio ( excluding other income) 13.25 6.81 95% On account of better operational performance
Net Profit Ratio 10.14% 2.86% -255% On account of increase in Turnover and reduction in Finance Cost.
Return on Capital Employed 36.99% 10.16% -264% On account of increase in Turnover and reduction in Finance Cost.

Internal Control Systems

The Company has proper and adequate systems of internal control ensuring efficiency of operations, statutory compliances, reporting and recording of transactions. The system is supported by management and internal audit.

Human Resources

The Companys human resource policy lays stress on motivating and training people for better work culture and environment and continuous improvement in productivity, efficiency and quality.

For and on behalf of the Board of Directors

Place : Vadodara Ashok Malhotra
Date : 10th August, 2021 Chairman & Managing Director
DIN : 00120198