Rolcon Engineering Company Ltd Management Discussions.

Pursuant to Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by Company?s competitive position) is given below:


Global Economy

World has faced a long battle against the COVID-19 virus and its new strains, the global economic recovery is continuing, even as the pandemic resurges. The global economy recorded a robust growth of 5.9% in FY 2021, against the 3.3% in FY 2020. Effective policies, vaccination drives, timely interest rate redressal and relaxation of the lockdowns by the Government worldwide boosted demand in various segment of the economy. However, at the end of the FY 2021-22, the war between Russia and Ukraine has weakened the momentum of progress and uncertainty has increased worldwide. The Global Supply chain has disturbed and fuel price has been increased which also expected to boom in FY 2022 and coming years. On the other hand Europe is facing severe difficulty due to interruption threat by Russia. Overall, the pricing of inflation is expected in following to this unpredicted crisis.

Going forward the IMF expects the Global growth likely to be 3.6% in 2022. War induced commodity price increases and broadening price pressure have led to 2022 inflation projections of 5.7% in advanced economies and 8.7% in emerging and developing economies. S&P Global rating GDP growth forecast at 3.2% for 2022.

Indian Economy

The outbreak of COVID-19 pandemic halted life in FY 2020-21 and for some considerable time in FY 2021-22 as well. However, Indian Economy has shown steady growth inching closer to the pre pandemic level. The Government brought in various reforms that boosted the manufacturing sector and by year 2025, the government expenditure on infrastructure will be increased by Rs. 111 lakh. The government led changes in interest rates, liquidity rates and policies, at the regular intervals help the Indian economy to gain momentum.

The Economic Survey advance estimates a growth rate of 8.9% in FY 2022-23. The IMF projects a GDP growth of 8.2% for FY 2022-23 and 6.9% for FY 2023-24, which is slight lower than earlier forecast, reflecting in part weaker domestic demand as higher oil prices are expected to weigh on private consumption and investment and a drag from lower net exports.

The growth prospects across various sectors seem promising. Agriculture is expected to grow at 3.9% on the back of a good monsoon. The manufacturing and construction segments are estimated to grow in double digits, bolstered by rising demand, easy availability of credit and stimulus packages, and a favourable base. Private consumption is expected to grow and the Government expenditure is keeping the economic activity ticking. This also means investment demand, as represented by the gross fixed capital formation, is likely to grow at the rate of 15%. Owing to robust revenue collections and nominal GDP growth of 17.6%, Government capital expenditure is expected to rise during Q4 FY 2021-22. The fiscal deficit for FY 2021-22 went marginally up from 6.8% to 6.9%, and is likely to be 6.4% in FY 2022-23. This can be attributed to the Government?s focus on investment led growth, conservatism and realism. The Government is being mindful about the pandemic-related concerns and the global geopolitical challenges have emerged and the rate hikes cycle is about to start globally. The Indian Economy remains optimistic in terms of growth opportunities. Certain risks, such as the rise in fuel prices, inflation, international war tens situation as well as new strains and variants of the COVID19 virus, can be challenging. But India continues to be an attractive space for investors, as an alternate manufacturing destination for specific industries, such as Information Technology, Manufacturing Industry and the Agricultural Sector.

Industrial & Engineering Market

India?s engineering sector has witnessed a remarkable growth over the last few years driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of strategic importance to India?s economy. India, on its quest to become a global superpower, has made significant stride towards developing its engineering sector. The engineering sector in India attracts immense interest from foreign players as it enjoys a comparative advantage in terms of manufacturing cost, technology, and innovation. The above, coupled with favourable regulatory policies and growth in the manufacturing sector, has enabled several foreign players to invest in India. The Indian engineering sector is of strategic importance to the economy owing to its intense integration with other industry segments. The sector has been delicensed and enjoys 100% FDI. With the aim to boost the manufacturing sector, the Government has relaxed the excise duties on factory gate tax, capital goods, consumer durables and vehicles.



• The global Drive Chain market reached a value of US$4.9 Billion in 2021. Looking forward, it is expected to be reach US$6.1 Billion in 2022 by 2027, exhibiting at a CAGR of 3.8% during 2022-2027. Growing at a revised CAGR in the post-COVID-19 period Cement, Sugar and Fertilizer Industries is expected to boom in where Conveyor Chain is mainly used.

• The rising demand for Steel in the world has predicted that in FY 2022-23 crude steel production in India is estimated to increase by 18%, to reach 120 million tonnes.

• Engineering Manufacturing Company?s Demand for spare would increase slowly in respond to the overall manufacturing growth in the Country and outside and as such business of industrial chain sprocket is expected to rise.


• Russia and Ukraine war: Based on the current conflict between Russia and Ukraine created global tense and inflation on the price of natural gas and oil and future market environment estimates, the base cost of material is expected to continue to be volatile. GDP witnessed contraction pushing forecast below estimated.

• Covid-19 pandemic: With the threat of the pandemic continuing globally, China is still fighting against COVID. Also, Experts warn the world to be remain alert.

• Availability of Steel and its Price Volatility is very high.

• High bond yield in USA at all-time high, which has huge impact on global economy and Dollar index.

• Inflation index in USA at highest level, so as India has huge impact on demand all over the world.


The Indian Economy remains optimistic in terms of growth opportunities. The overall macro-economic stability indicators suggest that the Indian economy is well positioned to take on the challenges of FY 2022-23. Strategies adopted by the Indian Government, such roots the india business units. as PLI scheme and The Company is confident that it can utilise future opportunities and face future challenges with agility in order to meet the shareholders? expectation of sustainable growth and profitability. The key focus areas are:

• Adoption of New Technology and Machinery

• Diversification New Products/ Services from Existing Customer

• Increasing the Value Addition per product

• To Sustain the EBITDA levels

• Retaining the existing Customer base and wallet share

• More Focus on Marketing all over the globe

• To explore Export sales

• Growth oriented Investment


performance with respect to operational performance

The Highlights of the Company?s performance is provided below:

Turnover increased by 63.75 % and stood at 4189.80 Lakh due to fast recovery in economy and increases overall demand from all sectors in the country (YoY).

PBT grown by 331.88 % from 92.34 Lakh to 398.80 Lakh

PAT grown by 418.75 % from 55.85 Lakh to 289.72 Lakh

EBITDA has Increased by 205.43% from 159.04 Lakh to 485.76 Lakh

Long term borrowing has grown by 567.10 % from 9.02 Lakh to 60.14 Lakh (Overdraft from the bank against Fixed Deposit)

Operating cash flow now stands at 1.58 Crs as against 0.95 Crs in LY

Segment: The Company has identified its business of Manufacturing ‘Engineering Goods? which is only ‘operating Segment? as primary reportable segment.


Ratios Units FY 2021-22 FY 2020-21 % Change
Debtors Turnover Times 9.97 6.97 3
Inventory Turnover Times 6.25 3.68 2.57
EBIDTA margin % 20.19 6.22 13.97
Net Profit margin % 6.91 2.18 4.73
Return on Net worth % 2.57 2.24 0.33
Current Ratio Times 1.68 1.75 (0.07)
Debt Equity Ratio Times 0.71 0.73 (0.02)



The Company maintains adequate and effective internal control systems commensurate with its size and complexity. It also ensures that they are recorded in All material respects to permit preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss. In the opinion of the Management, the Company has adequate internal audit and control systems to ensure that all transactions are authorized, recorded and reported correctly. An independent internal audit function is an important element of the Company?s internal control systems. This is supplemented through an extensive internal audit program and periodic review by the management and the Audit Committee. The Corporate Governance practices instituted by the Company are discussed in detail in the chapter on Corporate Governance which forms part of the Annual Report.


The Management maintains an active oversight of the risk and the effectiveness of the risk mitigation strategies and plans put in place by the Company. Covid-19 and unexpected conflict in Europe specially between Russia and Ukraine highlighted the need to proactively define and implement strategies to address uncertain or contingent risk as one of the key business risks facing the Company. The general slowdown of the economy due to disruptions caused by the pandemic and war zone as well as continued volatility in input costs and foreign exchange remains a risk. The Company has appropriate mitigation plans to protect margins while continuing to grow and transform the business. While the Company?s focus on long term strategic drivers and brand building continues.

Strategic and pricing interventions as well as cost and efficiency management programs were undertaken keeping in mind input costs, competitive positioning and product brand strategy. The Company actively managed its cyber security risk including the impact of greater remote working required during the pandemic by promoting the right behaviors and using tools and processes to protect its information, systems, assets and people against current and emerging cyber security threats. The Company has a robust risk mitigation plan to minimize identified risks through continuous monitoring and mitigating actions as may be required.


The Company recognizes that human capital is its cardinal asset. Prudent HR practices have helped nurture the skills and growth of its employees. The Company extensively invests in training programmes and learning modules. It reinforces engagement with employees across levels by providing an enriched workplace and transparent communication. With new ways of working during the pandemic, the Company is now geared to create a digitally-enabled workplace to the extent possible, with seamless virtual collaboration. The Company consciously works and maintains harmonious industrial relations at its offices and plants. It believes and nurtures a culture of complete transparency through open communication channels with easy access. The Company further refines its policies in alignment with its organizational interest, benefitting everyone at the same time. As on March FY 2022, the Company had a total team of 248 employees adding value to the organization.


The statement forming a part of this Report may contain certain forward-looking remarks with the meaning of applicable Securities Law and Regulations. Many factors could cause the actual results, performances, or achievements of the Company to be materially different from any future results, performances, or achievements. Significant factors that could make a difference to the Company?s operations include domestic and international economic conditions, changes in government regulations, tax regime and other statutes.

For and on behalf of Board of Directors of

Rolcon Engineering Company Limited


Suresh H. Amin

Chairman & WTD

DIN: 00494016

Vallabh Vidyanagar

May 20, 2022.