FORWARD- LOOKING STATEMENTS
This Report contains certain forward-looking statements. These forward-looking
statements generally can be identified by words or phrases like “will”,
“aim", “believe”, “expect", “will continue",
“anticipate”, “estimate", “intend”, “plan”,
“seek to", “future”, “objective", “project”,
“should” and similar expressions or variations of such expressions, that are
“forward looking statements”. Similarly, the statements that describe our
objectives, plans or goals are also forward-looking statements. All forward looking
statements are subject to risks, uncertainties and assumptions about us that could cause
actual results differ materially from those contemplated by the relevant statement.
Actual results may differ materially from those suggested by the forward looking
statements due to risks or uncertainties associated with our expectations with respect to,
but not limited to, regulatory changes pertaining to the cable industry in India and our
ability to respond to them, our ability to successfully implement our strategy, our growth
and expansion, technological changes, our exposure to market risks, general economic and
political conditions in India and our overseas markets which have an impact on our
business activities or investments, the monetary and fiscal policies of India, inflation,
deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity
prices or other rates or prices, the performance of the financial markets in India and
globally, changes in domestic and foreign laws, regulations and taxes and changes in
competition in our industry. The following discussion is based on internally prepared
statistical information and publicly available information.
OVERVIEW F.Y 2015-16
INDUSTRY STRUCTURE AND DEVELOPMENTS
Cable & Automation industry in India
Power and Industrial Electrification and Digital Telecom network spread across the
country form the critical infrastructure backbone of India’s economy. This
infrastructure is undoubtedly dependent upon the manufacturers of power & Industrial
automation cables and manufacturers of Networking & telecom cables in the Indian
cables industry. With the market environment shifting to a more competitive and complex
plan, the Company has taken strategic measures by moving up the technology path and
shaping its future with a distinctive competitive edge to ensure long term sustainable
growth.
Apart from the power cables and automation, telecom cables, Indian cable manufacturers
are producing technologically advanced specialty cables including instrumentation systems
and cables, process control instruments and cables, and we also deal with various major
all types of cotton fabric cloth tape for use in various types of protection material for
domestic purpose and industries and general purpose, which are used by the Indian
industrial projects and general house hold users.
The Indian Electrical control and energy cable industry is highly fragmented with large
number of cables producers. Many of these companies are small-scale cables producers, the
smallest of which are family-run operations which use the most basic production
equipments. There has been very limited consolidation amongst the major players in the
industry. The tendency of cable companies to grow organically, rather than by acquisition
of competitors, means that no dominant groups have emerged in the industry. The sector
witnessed sustained market depression during the period 2014-2015 we hope there will be
upswing in the cables industries so that we can grow in a high growth sector,
The company have suffered heavy losses due to various reasons such as underutilization
of installed capacity, change in the market demand and delay in various industrial
approvals and certifications from eminent project consultants & engineers. We have
time to time opted latest technology and added various new product segment in last 7 years
and have always been in implementing the required changes in product range and segment by
modernization of Plant & Machinery, We have installed one of the best software for
Technology up-gradation and modernization for improving the product design and cables as
per international standard. Many times time we have faced difficulties in achieving the
object due to under utilization of our installed capacity & lack of working capital,
some of the most critical situation we have faced were Volatility in Metal & Steel
market, Demand of industrial electrical cable due to which large prestigious orders were
cancelled . Apart from BIS approvals and certification we have faced various challenges
like not been issued Vendor Registration from number of eminent buyers as all large buyers
have there own listed fixed and identified suppliers and they do not enlist new vendor
Large buyers of our cables generally asked us for various paper approvals and
documentation and when we finally approved by their QC & Vendor Registration
Department than the special terms were discussed by various reputed buyers for supply of
cables within 6 to 9 months payment terms and they place order only if we supply cables
with vanpue-iftspection and certification with site inspection and then they make payment
after 6 to 9 months which is not with this heavy risk of rejection of cables if we
disagree their other terms for such practice for new vendor need to induct more than 100
Crores to achieve 50 to 60 % installed capacity, Amounting to Rs.10 to 100 Crores is
required and we have requested our growth partners bankers and financial institution to
infuse funds based on our enhancement of working capital as per projection, but have not
funded us due to various internal banking norms. We have also requested our esteemed
bankers for CDR (Corporate debt restructuring so that we can get investor in on going
facility but not received any approval and our Bank Accounts was classified as NPA.
Various norms to be followed is amongst the major challenges to be faced by small
upcoming promoters like us for example BID Bond , Bank Guarantee Performance and various
other heavy expenses , we were unable to bear such heavy expenses which made our business
in slow down . Apart from above we have also faced various big challenges from other
government departments. For last 6 years we have been submitting the documents and most of
the notices issued to us have been ordered in our favor including demand order notice. We
have recently settled various issues of the government departments which were pending from
last 6 years. Since we have to manage the plant and overall compliances of various
government authorities but we have been under financed by all our esteemed bankers and we
have never been sanctioned and disbursed the facility on time whenever required to execute
our prestigious orders, With this the company was unable to fulfill all its commitments to
top level management so they all left and also our various prestigious orders were
cancelled and most of all 20 years of our reputed customers were lost due to insufficient
fund for executing the valued customers orders.
From last several years we have not been properly & timely financed by bankers in
spite of our regular submission of proposals. Even after that we have achieved the sales
of Rs.5.29 Lacs in the 1st year grown up to Rs.115 Crores in F.Y.2013-14. Now we are
planning to approach all customers in infra customers, solar cables customer and LED
lighting customer by trading of cables as our plant is with Our Esteemed Bankers. And we
have to run the business to survive and pay to the department.
All major business facility Silvassa plant has been shut down from last year and now
new trading division is under planning stage to re start the developed market and it will
be marketed by India’s one of the most reputed cables company, the full-fledged
business will start in next 3 to 6 months and many customers approvals and government
samples have been sent for certification and after receiving the certification of
approvals, we will find suitable working capital partner & we hope by this running of
new division and with our 21 years of knowledge we will convert our company in
profitability.
CHALLENGES, RISKS AND CONCERNS
Financial Market Risks
We are exposed to financial market risks from changes in interest rates and inflation.
Interest Rate Risk - Our interest rate risk arises from short term and long-term
borrowings. Borrowings obtained at variable rate expose us to cash flow interest rate
risk. Many of our existing loan as well as loans which we propose to raise to fund our
proposed capital expenditure would be linked to respective bank PLR, any rise in interest
rates could have our bankers to push for a higher rate of interest on the loans.
Inflation Risk - We are affected by inflation as any rise in inflation may lead to
increment in cost of raw materials, fuel & power cost, employee cost, etc.
Significant Economic Changes affecting our Business operations.
Any major change in the industrial policies of the government may have a significant
impact on our operations. Except the above, there are no significant economic changes that
may materially affect or likely to affect income from continuing Business operations.
COMPANY OUTLOOK
The Company is operating with focused efforts on cost control, reduction in cycle time,
improvement on operational efficiency and efficient Working Capital Management. Programs
This has helped the Company in controlling costs and also to be competitive. Timely
delivery has reaffirmed the dependable image created by the Company in the market.
The gross sales have decrease from Rs.7376.70 Lacs to Rs.3546.57 in F.Y.2015-16
INTERNAL CONTROLS
The Company has formulated certain policies to oversee the Internal Controls both from
the business trade process and regulatory compliance point of view. The Company has also
formulated a Corporate Policy on Internal Controls to provide a structured framework for
identifying and rectifying Internal Control weaknesses as also monitoring and reporting
the same to the Corporate Management. It details the specific responsibilities and tasks
enjoined upon the employees in certain positions.
Apart from structured framework, the Company has well documented policies, procedures
and authorization guidelines commensurate with the level of responsibility and standard
operating procedures specific to respective businesses.
FINANCIAL REVIEW
The following table sets forth certain information with respect to the results of
operations of the Company as derived from our restated financial statements for the period
indicated:
| Particulars |
For the period ending March 31 |
|
2016 |
2015 |
| Net Sales |
3546.56 |
7376.70 |
| Other Income |
18.72 |
3.33 |
| Increase / Decrease in Stock |
(2504.30) |
(656.08) |
| Total |
1060.98 |
6723.95 |
| Expenditure |
|
|
| Material consumed / Purchases |
3710.51 |
10133.17 |
| Employee Expenses |
26.50 |
29.61 |
| Manufacturing Expenses |
10.56 |
16.86 |
| Administration Expenses |
58.91 |
80.17 |
| Total |
3807.26 |
10259.81 |
| Earnings Before Interest, Depreciation, Tax and Amortization |
(2746.28) |
(3535.86) |
| Less: Interest & Bank Charges |
696.65 |
510.73 |
| Earnings Before Depreciation, Tax |
(3442.15) |
(4046.59) |
| Less: Depreciation |
3153.07 |
343.02 |
| Earnings Before Tax |
(6595.99) |
(4389.61) |
| Less: Provision for Taxation |
|
|
| Deferred Tax Liability |
6.68 |
61.17 |
| Less: Tax Paid |
|
|
| Net Profit after tax but before prior period adjustment |
(6602.67) |
(4450.78) |
| Less: Prior Period Adjustment |
0.0 |
70.61 |
| Net Profit After Tax and Extra Ordinary Items |
(6602.67) |
(4521.39) |
Comparison of year ended March 31, 2016 with year ended March 31, 2015.
Income
Sales - Our sales in fiscal 2016 were Rs. 3546.57 as against Rs. 7376.70 lacs in
fiscal 2015.
Other Income - Our other income Rs. 18.72 in the fiscal 2016 to Rs3.33lacs
in the fiscal 2015.
Expenditure
Material Expenses - In fiscal 2016 our Input material expenses / purchases amounted
to Rs 3710.51 Lacs constituting 104.62% of net sales while Input material expenses in 2015
were
Rs. 10133.17 lacs constituting 137.36% of net sales.
Manufacturing Expenses - Our manufacturing expenses stood at Rs. 10.56 Lacs in
fiscal 2016 i.e. 0.297 % of net sales as compared to Rs. 16.86 lacs in fiscal 2015, i.e.
0.22 % of net sales.
Administrative Expenses - The administrative expenses stood at Rs. 58.91 Lacs in
fiscal 2016 i.e. 1.66 % of net sales as compared to Rs. 80.17 lacs in fiscal 2015, i.e.
1.08 % of net sales.
Employee Expenses - The employee expenses stood at Rs 26.50 Lacs in fiscal 2016
i.e. 0.747 %of net sales as compared to Rs. 29.61 Lacs in fiscal 2015, i.e. 0.40 % of net
sales.
Interest & Bank Charges - Interest expenses amounted to Rs. 696.65 Lacs in
fiscal 2016 i.e. 19.64% of net sales as compared Rs.510.73 Lacs in fiscal 2015 i.e. 6.92%
of net sales. The increase is on account of additional working capital loans borrowed from
banks to fund additional working capital requirements.
Depreciation - Depreciation amounted to Rs. 3153.07 Lacs in fiscal 2016 i.e. 88.90 %
net sales as compared to Rs. 343.02 Lacs in fiscal 2015 i.e. 4.65% of net sales.
Provision for Taxation - The provision for tax for the fiscal 2016 was NIL as
compared to provision for tax of NIL in the fiscal 2015.
Earnings before Interest, Depreciation, Tax and Amortization (EBIDTA) - We recorded
an EBIDTA of Rs. (2746.28) Lacs in fiscal 2016 as against an EBIDTA of Rs. (3535.86) lacs
in fiscal 2015, with EBIDTA margin Decreases from 546.68% in fiscal 2015 to 22.33% .in
fiscal 2016.
Net Profit after tax and prior period adjustment - Our Net Loss for the fiscal 2016
stood at Rs. 6602.67 lacs as against Loss Rs. 4521.39 of for fiscal 2015.
Operating Activities
Cash flow from operating activities mainly depends on our operating profits and changes
in net working capital. The following table summarizes our cash flows from operations for
each of the years ended 2014-2015 and Current FY- 2015-2016.
| Particulars |
For the year ended March 31st |
|
2016 |
2015 |
| Net Profit before tax and extraordinary items |
(6595.99) |
(4389.60) |
| Operating profit before working capital changes |
(2763.31) |
(3519.31) |
| Adjustment for changes in working capital |
3382.29 |
3895.17 |
| Cash Used in operations |
618.98 |
375.85 |
| Direct Taxes Paid / Provisions Adjusted |
0 |
(70.61) |
| Cash Flow before Extraordinary Items |
618.98 |
305.24 |
| Extraordinary Items |
- |
|
| . Net Cash from operating activities |
618.98 |
305.24 |
Net cash Flow From operating activities in the fiscal 2016 was Rs. 618.98. lacs,
reflecting a net profit before tax and extraordinary items of Rs. (6595.99) lacs,
depreciation & preliminary expenses write off of Rs. 3153.07 lacs, Profit on sale of
fixed asset of Rs. 14.88 lacs, and interest Expenses of Rs 696.65 lacs. Working capital
adjustment included decrease in trade & other receivables of Rs. 177.34 lacs, decrease
in inventories of Rs. 2506.94 lacs and Increase in trade and other payables & Short
Term Loan of Rs. 694.85 lacs. After all adjusting, the net cash Flow From operating
activities was Rs 618.98 lacs in the fiscal 2016.
Net cash Flow From operating activities in the fiscal 2015 was Rs. 305.24. lacs,
reflecting a net profit before tax and extraordinary items of Rs. (4389.60) lacs,
depreciation & preliminary expenses write off of Rs. 346.52 lacs, Loss on sale of
fixed asset of Rs. 16.37 lacs, and interest Expenses of Rs 510.73 lacs. Working capital
adjustment included decrease in trade & other receivables of Rs.2476.54 lacs, decrease
in inventories of Rs. 1409.69 lacs and Increase in trade and other payables of Rs. 66.03
lacs. After adjusting for taxes and provision of Rs.127.71 lacs, the net cash Flow From
operating activities was Rs 305.24 lacs in the fiscal 2015.
Financing Activities
The following table summarizes our cash flows from financing activities for each of the
years ended March 31, 2016 and 2015.
| Particulars |
For the year ended March 31st |
|
2016 |
2015 |
| Proceeds from Call Money of Share Capital |
|
|
| Proceeds of Loans from Banks / Institutions |
- |
- |
| Proceeds / (Repayment) of Unsecured Loans, Long Term Borrowing |
54.31 |
22.80 |
| Dividend Paid (Including Tax) |
- |
- |
| Interest & Finance charges paid |
(696.65) |
(510.73) |
| Net Cash (used in) / from financing activities |
(642.33) |
(487.93) |
Net cash Used in financing activities in the fiscal 2016 was Rs 642.33 lacs, primarily
comprising of proceeds of call money on share capital to the tune of Rs Nil, proceeds of
loans from banks of Rs Nil Lacs, net proceeds of unsecured loans & long term borrowing
was Rs 54.31 Lacs, offset by dividend payment of Rs Nil and interest and finance charges
of Rs 696.65 Lacs, resulting in net cash used in financing activities being Rs. 642.33
Lacs.
Net cash Used in financing activities in the fiscal 2015 was Rs 487.93 lacs, primarily
comprising of proceeds of call money on share capital to the tune of Rs Nil, proceeds of
loans from banks of Rs Nil Lacs, net proceeds of unsecured loans & long term borrowing
was Rs 22.80 Lacs, offset by dividend payment of Rs Nil and interest and finance charges
of Rs 510.73 Lacs, resulting in net cash used in financing activities being Rs. 487.93
Lacs.
BUSINESS OVERVIEW
Over the years, we have expanded our product range and have added variety of cables in
our product range like Industrial control cables, Hi- Tech- data cables, Process control
instrument systems & signal cables, Thermocouple extension and Compensating cables,
Computer application, Hi- Bit rate networking cables, Digital data communication systems,
Specialty cables and Customized cables. And also PVC Compound and Domestic &
Industrial Protection Fabric Material, with the objective of moving up the value chain we
identified new opportunities and are now diversifying into Electrical Low Voltage Energy
and Power cables on a major level.
Our Company is a regular supplier to many large Corporate and well known Public and
Private Sector Undertakings Since last Several years
Our Company is ISO Certified and having BIS-ISI Mark on Our Cables ISI-694, ISI: 1554
ISI 7098 certified by Bureau of Indian Standards
HUMAN RESOURCE DEVELOPMENT
One of the ‘Key" reasons for the exponential growth of Rishabhdev is
undoubtedly its "People Given the right environment and nurturing that is provided,
time and time again seemingly “Ordinary" people surprise the Company as they
deliver extraordinary results This has indeed been the cornerstone of
“Rishabhdev" resounding success. We are committed to ensure adequate safety for
our workers. The workers are provided with suitable protective requirements.
CAUTIONARY STATEMENT:-
Statements mentioned in the Management Discussion Analysis about the Companys
objectives, estimates, and expectations may be “forward looking statements"
within the meaning of applicable securities laws and regulations. Actual results could
differ materially from those expressed or implied. Important factors that could make
difference to the Companys performance include economic conditions affecting demand/
supply and rice conditions in domestic market in which your Company operates, changes in
Government regulations, tax laws, statutes and other incidental/related matters
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