MANAGEMENT DISCUSSION AND ANALYSIS REPORT
This section contains certain forward-looking statements which are based on the certain assumptions and expectations of certain future events.
Overall Review
The unit of the Company is located at Plot No.3 & 4, Block ‘H at Kandla port, Kandla, Kutch District in Gujarat. The location of the unit is very ideal for the reason that Kandla port is a site recognized by the Government authorities for export and import. The Company has developed petroleum and edible oil storage tanks with connecting pipelines with Port/ Jetty for directly loading & unloading ship. These storage tanks are rented and the rental income shares a major portion of the Companys total income. The Company has in all fourteen storage tanks owned by it.
The Company was involved in the business of trading in commodities including silver. Subsequently, the Company decided to close down the businesses of dealing in bullions, currencies etc. However, the Company continues to carry on the business of renting of storage tank, trading in commodities including gold and silver and also shares and securities.
Industry Structure and developments
There are very few organised players in the field of commodities trading and renting of storage tank. As such these activities are carried out by large number or unorganised players and such activities are also carried out by organised players as incidental/ancillary/other activities.
The Commodities trading business is very volatile and risky in nature. There has been sweeping movements in the commodities in which the Company deals. Hence, the company has to take market position after considering various factors. As regards, business of renting of storage tank, there is more or less assured revenue stream. However, due to increased capacity available, the rates/realisation are under pressure. The Company, therefore, enters into firm contract with reputable corporate to have hedge against sudden drop in rent and to optimise its revenue from this segment.
Opportunities and threats
The volatility in the commodity prices provides both opportunities and poses threat. Hence, the Company weigh all aspects before venturing into the commodities trading. Due to general trade depression, lesser import of edible oil, increase in overall tank capacity at Kandla, the rent rates have come down substantially. However, in the time to come, if edible oil industry trade scenario improves, there may be more realisations from the renting of the storage tank.
Internal Control Systems & their adequacy
The Company practices an internal control system which ensures proper handling and management of its assets. The internal control system of the Company is geared towards achieving efficiency in operations, effective monitoring and compliances with all applicable laws and regulations. The Company regularly conducts internal audit programs. The internal control department of the Company functions under the guidelines of the Audit Committee of the Company.
The Company regularly reviews the adequacy and effectiveness of the internal control system and suggests improvement for strengthening them.
Outlook and Opportunities
The Companys one portion of income is dependent on the rent received from letting the tanks, and it is likely to increase in the near future if we get the permission of increase of heights of our storage tanks.
There is a strong undercurrent prevalent in the commodities market also, which is favourable for the company. Our main portion of income is from rent for giving storage tank on hire. At the same time, wherever found appropriate, the Company also undertake trading in commodities and its future market.
Discussion on financial performance with respect to operational performance
The gross turnover of the Company has decreased from Rs.831.23 Lakhs to Rs. 431.09 Lakhs. However, there was Profit after Tax of Rs. 65.27 Lakhs as compared to Loss after Tax of Rs. 90.27 Lakhs in the previous year which has been transferred to the Balance Sheet.
Financial Performance:
(Rs. In Lakhs) | ||
Particulars | Current Year Ended 31.03.2023 | Previous Year Ended 31.03.2022 |
Revenue from Operations (Gross) | 431.09 | 831.23 |
Add: Other Operating Income | - | - |
Less: Total Expenditure | 357.03 | 891.44 |
Profit before other income, interest, depreciation & tax | 74.06 | (60.21) |
Add: Other Income | 4.74 | 17.40 |
Profit before Interest Depreciation & Tax [PBIDT] | 78.80 | (42.81) |
Add: Interest Income | - | - |
Earnings before Interest, Tax and Depreciation (EBITDA) | 78.80 | (42.81) |
Less: Interest Expense | 3.20 | 5.41 |
Less: Depreciation | 10.33 | 42.05 |
Profit before tax | 65.27 | (90.27) |
Less: Tax Expenses | - | - |
Profit for the year | 65.27 | (90.27) |
Details of significant changes in key financial ratios are as given below:
Sr. No. PARTICULARS | UOM | F.Y.2021-22 | F.Y.2022-23 | Growth YOY |
1 Revenue Growth | % | 831.23 | 431.09 | (48.14) |
2 EBITDA | Lakhs | (42.81) | 78.80 | 284.07 |
3 EBITDA Margin | % | (5.15%) | 18.28 | 23.43 |
4 PBT | Lakhs | (90.27) | 65.27 | 172.31 |
5 PAT | Lakhs | (90.27) | 65.27 | 172.31 |
6 Net Worth | Lakhs | 236.46 | 301.73 | 27.60 |
7 ROE % | % | (38.18) | 21.63 | 59.81 |
8 Net Debt | Lakhs | Nil | Nil | N.A. |
9 Debt | Weight | 0 | 0 | N.A. |
Equity | 1 | 1 | N.A. | |
10 Working Capital Ratio | Times | 0.59 | 1.03 | 74.58 |
11 Fixed Assets Turnover Ratio | Times | 4.20 | 2.51 | (40.23) |
12 Debt Service Coverage Ratio | Times | N.A. | N.A. | N.A. |
13 Inventory Turnover Ratio | Times | N.A. | N.A. | N.A. |
14 Debtors Turnover Ratio | Times | 15.84 | 21.40 | 35.10 |
15 Interest Coverage Ratio | Times | N.A. | N.A. | N.A. |
During the year under review, the revenue was decreased. However, there was improvement in EBIDTA, PBT and PAT due to decrease in cost. Consequently, the Company has been successful in achieving operational efficiency in working capital, debtors turnover. Due to decrease in turnover, fixed assets turnover has been deteriorated. Due to increase in current assets, working capital ratio has improved
Risks and Concerns
The Company regularly insures all its assets to enable itself in case of any mis-happening. The Company has framed a risk management division which constantly monitors the Indian and international markets and guides the management of any sort of prevailing risk to the Company, as the Company is involved in the business of trading in commodities, gold & silver, which is highly volatile in nature. The commodities, gold & silver prices being internationally traded are affected by the global market demand and supply forces and the dollar rate. The risk management division plays a major role here.
Material Developments in Human Resources and Industrial Relations Front, including number of people employed
The Company has continued to give special attention to Human Resources/Industrial Relations development. Industrial relations remained cordial throughout the year and there was no incidence of strike, lock out etc.
Cautionary Statement
Statement in this Management Discussion and Analysis Report, describing the Companys objectives, estimates and expectations may constitute ‘Forward Looking Statements within the meaning of applicable laws or regulations. Actual results might differ materially from those either expressed or implied.
By Order of the Board | |
sd/- | |
Jagdish R. Acharya | |
Place : Ahmedabad | (DIN: 01251240) |
Date : 30th May, 2023 | Chairperson & Managing Director |
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.