Rapicut Carbides Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS

TUNGSTEN CARBIDE INDUSTRY STRUCTURE, PERFORMANCE, DEVELOPMENT, OVERVIEW AND OUTLOOK

The Management is happy to share thatthe overall business climate is slowly but certainly improving.

OUTLOOK

We are pleased to present the Management Discussion and Analysis (MD&A) report for Rapicut Carbides Limited for the Financial Year ended 31st March, 2023. This report aims to provide you with a comprehensive overview of our business performance, key achievements, challenges faced, and future prospects.

The Tungsten Carbide Industry plays a crucial role in various sectors, including Manufacturing, Mining, Construction, Defense and Aerospace. Tungsten Carbide, a hard and wear-resistant material, is known for its exceptional properties, making it highly sought after for cutting tools, drilling equipment, and wear parts.During the year, the Tungsten Carbide Industry experienced several noteworthy trendssuch as growth in demand for cutting tools, increasing usage in the automotive industry, technological advancements, etc. These trends have not only influenced the industrys overall performance but also opened up new growth opportunities for Companies operating within the sector.

We have no doubt that overall Outlook of the Industry during the current Year holds promise of appreciable growth.

We etend our gratitude to all stakeholders for their continued support and belief in the potential of the Company. As we move forward, we are committed to steering our business towards sustainable growth, adhering to best practices, and delivering long-term value to our shareholders.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONS

The product-wise performance of the Company is mentioned below: -

Sr. No.	Particulars of Products Manufactured	12 Months ended 31st March, 2023	12 Months ended 31st March, 2022
1.	Metal Cutting	4,89,252 Nos.	3,55,375 Nos.
2.	Mining	2,54,520 Nos.	3,18,190 Nos.
3.	Wear Parts	72,653 Nos.	65,982 Nos.
4.	Intermediates	58,605 Kgs.	55,695 Kgs.
5.	TC Tool Room Products	30,841 Nos.	26,501 Nos.

ln all products with the exception of Mining, Company succeeded in securing fairly reasonable volumes. Mining activity was most impacted by emerging substitute product. namely Taper Mining Bit, hence the numbers were restricted to about 80% compared with the previous year.

OPPORTUNITIES AND THREATS

Opportunities and threats are crucial factors that influence the performance and outlook of the Tungsten Carbide Industry. Understanding these factors is essential for businesses to make informed decisions and develop effective strategies. Here are some key opportunities and threats in the Tungsten Carbide Industry:

OPPORTUNITIES	THREATS
Growing Demand in Industrial Applications	Fluctuating Raw Material Prices
Technological Advancements	Competition from Substitute Materials
Expansion of the Aerospace and Defense Sector	Geopolitical and Trade Factors
Increasing Use in Additive Manufacturing	Economic Downturns
Emerging Economies and Infrastructural Development	Technological Disruptions

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Control Systems and procedures in the Company are commensurate with nature and size of its business. It is to be noted that not only the assets of the Company are safeguarded and protected against any losses, but also all the transactions are properly accounted and that they meetthetestoflegal compliances.

Apart from regular review and monitoring Internal Control Systems by the Companys Internal Control Department, an independent Chartered Accountants firm has been appointed to conduct the internal audit for the Companys manufacturing units. This provides reasonable assurance to the effectiveness of the internal control systems and procedures and reliability of Financial Reporting.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company has only one reportable primary business segment as per Ind AS 108 i.e. Tungsten & Tungsten Carbide Products.

RISKS AND CONCERNS

The Company evaluates and monitors all risks associated with various areas of operations such as production, sales. inventory Management, debtors Management with a view to counter the adverse impact of the risk factors, to the extent feasible. However, the element of risks and concerns remains as under: -

• Price Volatility in key raw materials and consumables;

• Uncertainty in sustained stability of Rupee Dollar equation;

• Natural Calamities, and other Unforeseen circumstances like pandemic, etc.

SAFETY, HEALTH AND ENVIRONMENT (SHE) MANAGEMENT

Your Company continues to adopt best safety practices which have helped avoiding serious accidents. Regular safety inspection of plant and machinery is carried out to prevent accidents

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Our people related policies span the entire spectrum of hiring the right talent as best as possible, up-skilling them and motivating them. This enables them in putting their best foot forward for fulfilling set targets. We do our best to provide our people healthy work environment that encourages sharing of knowledge, concerns and where the cross-pollination of ideas can always bloom. This reflects in their day to day performance at the ground level.

The details of employees are as under:

Number of Employees at the beginning of the year	98
Number of Employees recruited during the year	23
Number of Employees resigned during the year	16
Number of Employees retired/expired during the year	6
Number of Employees at the end of the year	99

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS DURING THE FINANCIAL YEAR 2022-2023

The key financial ratios during FY 2022-23 vis a vis FY2021-22 are as below:

Sr No.	Key Financial Ratios	FY 2022-23	FY 2021-22
1	Current Ratio (in times)	2.47	3.14
2	Debt Equity Ratio (in times)	0.16	0.09
3	Debt Service Coverage ratio (in times)	(0.99)	0.93
4	Return on Equity ratio (%)	(6.16)	(4.59)
5	Inventory Turnover ratio (no. of days)	170.32	179.08
6	Trade Receivable Turnover Ratio (no. of days)	3.80	4.14
7	Trade Payable Turnover Ratio (no. of days)	5.33	5.07
8	Net Capital Turnover Ratio (in times)	2.23	1.95
9	Net Profit ratio (%)	(0.03)	(0.03)
10	Return on Capital Employed (%)	(0.03)	(0.02}
11	Return on Investment(%)	(0.02)	0.05
12	Interest Coverage Ratio	NA	NA

Explanation on Significant changes in the above ratios:-

1	Current Ratio	: There is no significant change in the said Ratio.
2	Debt Equity Ratio	: The change is mainly due to usance of Cash Credit limit in Current Year vis-a-vis NILusance in Last Year.
3	Debt Service Coverage Ratio	: The change is mainly due to increase in Loss & Interest Cost.
4	Return on Equity Ratio % :	Change in Ratio is mainly due to increase in sales as compared to Previous Year.
5	Inventory Turnover Ratio	: There is no significant change in the said Ratio.
6	Trade Receivable Tu mover Ratio	: There is no significant change in the said Ratio.
7	Trade Payable Tu mover Ratio :	: There is no significant change in the said Ratio.
8	Net Capital Turnover Ratio :	: There is no significant change in the said Ratio.
9	Net Profit Ratio % :	: There is no significant change in the said Ratio.
10	Return on Capital Employed % :	Change in ratio is due to increase in EBIT as compared to Previous Year.
11	Return on Investment%	: Change in ratio due to lower interest income as compare to Previous year.

CAUTIONARY STATEMENT

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations are "forward looking" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

The Management is confident that your Company with its Quality products and Brand Equity and enduring relations with its customers and commitment of its staff, will overcome the disturbing impact of prevailing pandemic and work towards achieving growth in time to come.