rungta irrigation ltd share price Management discussions

Company Profile:

Rungta Irrigation Limited being a part of Rungta Group of Companies is owned & managed by the group of people having wealth of experience & high expertise. The Company manufactures Self fit PVC pipes, Elastomeric PVC Pipes, Casing Pipes, HDPE Pipes, MDPE pipes, RMS pipes, Sprinkler Irrigation Systems & Drip Irrigation System. It is an ISO 9001: 2015 company, with 30 years of successful journey and one of the reputed manufacturers of plastic extruded pipes in PAN India with the brand name of "RUNGTA". We are associated with major states like Uttar Pradesh, Madhya Pradesh, Maharashtra, Gujarat, Telangana, Tamil Nadu, Karnataka, Rajasthan, Haryana, Punjab, Himachal Pradesh, Uttarakhand, Jharkhand, Bihar, West Bengal, Odisha, Assam, Chhattisgarh, Andhra Pradesh and we also export our products to Bangladesh for execution of micro irrigation system (Online drip, Inline drip, Mini Sprinkler, Micro Irrigation, Rain gun, Portable sprinkler sets, UGPL systems). All the products confirm to the latest relevant IS / ISO & other specifications. It is being marketed PAN INDIA through a network of authorized distributors from our branch offices at Bhiwani, Jabalpur, Rajasthan, Jharkhand, Bihar, Hyderabad, Bangalore, Siliguri, Raipur, Tamil Nadu, Andhra Pradesh, & Bhubaneswar And Factories at Ghaziabad & Yanam.

Industry overview:

The financial year 2022-2023 began on a positive note as the adverse effect of Covid pandemic was effectively controlled with vaccination drive and valuable guidance from Central and State Governments. In India, RBI with its effective monetary measures, managed to contain inflationary pressures much better than the Central banks in most other countries. Agricultural crops were robust. Large investments were initiated in infrastructure by Central and State Governments. Forecast about monsoon was good, giving hope to boost agricultural production in the year. Demand for Domestic Consumption are also quite robust. Due to weak world economic forecast the commodity prices were on downward path, which augured well for boosting growth in economy of the country.

The effects of global disruptions can be seen nationwide, however, the extent of its impact on key sectors like water, wastewater and agriculture is uncertain. The Government is taking several initiatives to protect our sector. Several initiatives and new projects in the areas of major irrigation, minor irrigation, watershed management is been facilitated. The company managed to perform relatively better since it is driven more by domestic consumption. It is anticipated that there shall be increased business opportunities for the company in the near future.

Outlook on opportunities, threats, risks, and concerns:

We are into the business of Micro irrigation (Drip & Sprinkler irrigation system). Farmers are main users of this modern irrigation system. Also, half of the population of our country depends on agriculture for their livelihood. Every year there was some risks faced by farmers such as risk of shortfall in rain, uneven distribution of rainfall, competition from small manufacturers of unorganized sectors, seasonality and drought like situations are faced by the industries.

The Company is successfully spreading its reach in various parts of the country where it is being less represented. Each of the business division of the Company is working out extensive plan and strategy to reach such area by appointing new channel partners, increasing retailers and influencers connect and also creating awareness about our products.

Although there were some additional factors responsible for the drip in the market trends and opportunities and this although reduced ample business opportunities for the Companies in this Industry, and to reduce this effect the Government of India has launched number of schemes in favour of the farmers and agricultural sectors. The main aim of the government is to promote farming sector to help improve their economic condition.

Although, all products are manufactured as per the latest standards of BIS & ISO.

Internal Control System & Adequacy:

The company has adequate, proper and well placed Internal Financial Control System, which ensures that all the assets are safeguarded and all the transactions are authorized, recorded and reported correctly in a timely manner. To ensure effective Internal Financial Control, the company has laid down the following measures such as all the operations are executed through Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated as and when required. Also the system based reports and automated accounting for various areas in financial statements have contributed to better accuracy and reducing scope of errors.

The company has a comprehensive risk management framework which is evaluated by the Audit Committee & Risk Committee periodically. And the Functional heads are responsible to ensure regulatory compliances and also with the policies and procedures laid down by Management.

Accounting records of the company are adequate for the preparation of financial statements and other financial information. Internal audit is conducted on a continuous basis to ascertain the adequacy and effectiveness of internal control systems. Their observations are reviewed by the senior management and the Audit Committee.

Financial Performance:

The Sales Turnover for the year under review was Rs.13,013.36 Lakhs as compared to Rs. 7,025.84 Lakhs for the previous year ended 31 March, 2022. The company was able to earn a profit after tax for the year under review of Rs.298.32 Lakhs as against a profit of Rs. 127.72 Lakhs for the previous year ended on 31 March, 2022.

Human Resources:

The Company as per its Human Resource strategy focuses on inclusive, collaborative and growth oriented culture. Company?s workforce has grown from strength to strength over the last years. From its early days, Company remained an equal opportunity employer and has embedded these values in its employee life cycle management from hiring, retaining to retirement. The Company complies with all applicable fair employment practices and equal opportunity laws in every state where it operates.

The Company strictly prohibits discrimination against any employee or applicant based on language, race, colour, religion, sex, origin, ethnicity, age, disability, marital status, sexual orientation, gender identity, or any other category protected by law. Company firmly believes that people are its greatest assets and it is always endeavours to ensure their development and growth. Company?s strategy supports promoting diversity in its workforce while ensuring each employee feels empowered at work. It has robust human resource framework and processes which support the smooth functioning of workforce and wellbeing of all the employees. Linkage between personal goals and organizational goals is considered a vital aspect for the shared growth of employees and the organization. Annual appraisals are made to ensure such an alignment and the Company has to continue to invest in the development of its employees, which is very important for ensuring sustained high performance.

As on March 31, 2023, the total number of employees in your Company was 159.

Key Financial Ratios:

The Key Financial Ratios of the Company are given as follows:

Ratio	Standalone
Particulars	FY 2023	FY 2022
Inventory Turnover (Times)	7.49	4.15
Current Ratio (Times)	2.80	2.12
Debt Equity Ratio (Times)	0.14	0.35
Net Profit (%)	2.26%	1.78%
Return on Investment (%)	-6.75%	57.69%
Debt Services Coverage Ratio	2.54	1.34
Return on Capital Employed(%)	7.49%	4.31%
Trade Receivable Turnover Ratio	3.71	2.17
Trade Payable Turnover Ratio	43.13	57.89
Net Capital Turnover Ratio	2.80	1.74
Return on Equity(%)	3.88%	2.18%

Cautionary Note:

Statements in the Management Discussion and Analysis describing the Company?s objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in the statement. Any other factors that would influence the company?s operations such as cost of raw materials, tax laws, power cost and economic developments and such other factors within and outside the country.

For and on behalf of the Board of Directors

SD/-

Mahabir Prasad Rungta

Chairman cum Managing Director

Delhi, August 9, 2023