Sai Swami Metals and Alloys Ltd Management Discussions

GLOBAL ECONOMY

At the outset of 2023, encouraging developments ?n the global economy encompass the easing of inflation and energy costs from their apex levels, along with Chinas decisi?n to term?nate its zero-COVID strategy, which is projected to provide a stimulus to economic growth. Whilethe complete impact of these changes isyet to be ful ly realized, emerging markets and developing economies are already experiencing a substantial upswing in growth rates, reaching 3.6% this year compared to 2.8% in 2022. Inflation expectations are presently stable, with a predicted decrease from 7.0% this yearto4.9% in 2024, duetomajor central bankscommunicatingthe necessity for a more stringent monetary policy stance. Moderating demand and escalating interest rates globally will further erode inflationary pressures throughout 2023. The tightening of monetary policy by the majority of central banks is anticipated to drive inflation back toward its targets leading it toward the recovery path.

(Source: IMF - World Economic Outlook, April 2023, Euromonitor International - Global Economic Outlook: Q1 2023)

INDIAN ECONOMY:

Indian economy has ?ncreased in size from being lOth to 5th largest in the world in the past nine years. According to Economic Survey 2023-24, Indian economy has staged a broad based recovery across sectors and positioningto ascend to pre-pandemic growth path in FY24 driven by several measures taken by the Government and RBI - the Central Bank of India. According to Second Advanced Estimates of National Income 2023-24, the growth in real GDP is estimatedat 7.3% duringthe financial year 2023-24. M?ltiple agencies worldwide projects India to be the fastest growing economy in the world with a growth forecast expected in the range of 7.3% to 9.1% in FY24.

Indias economic growth in FY23 has been driven primarily by a rebound in pr?vate consumption, a significant increase in capital expenditure (CAPEX) by Government and a sustained growth in pr?vate CAPEX due to the strengthening of their balance sheet. The rebound in consumption was mainly driven by an increase in consumer confidence due to universal vaccination and an overall improvement in labor market conditions. This was reflected by ramp-up in ?nfrastructure and construction activity on the back of an increase in Capex by the Government. The growth in credit offtake, buoyant direct tax collections in FY23, retail inflation back within RBIs target range in November 2022 and increase in employment generation in urban markets also signaled the strength in the broad- based recovery of the economy.

Indias GDP growth is expected to remain healthy in FY24 backed by ?nfrastructure led growth model by the Government with an emphasis on transportation, housing, logistics and last mile connectivity. This is further supported by crowd-in pr?vate investments, improvement in consumption level and enhanced affordability.

BUSINESS OVERVIEW:

Our Company was originally incorporated as Pr?vate Limited, under the Companies Act, 2013 ("Companies Act") in the ?ame and style of "Sai Swami Metals and Alloys Pr?vate Limited" on September 23rd, 2022 under the provisions of the Companies Act, 2013 vide Certif?cate of Incorporation issued by the Registrar of Companies, Ahmedabad, Gujaratwith objectto acquire and takeover the running business of sol? proprietorship as going concern carried by the promoter in the ?ame and style as ‘Steel Kraft Industries. Later, company was converted into public limited company, the ?ame of the Company haschanged to"Sai Swami Metals and Alloys Limited" and for the same fresh Certif?cate of Incorporaron dated August lOth, 2023, issued by the Registrar of Companies, Ahmedabad, Gujarat.

Our company and our two subsidiarles i.e. Bhagat Marketing Pr?vate Limited and Dhruvish Metals LLP are actively involved in the trading and marketing of a comprehensive array of stainless-steel products, addressing the diverse needsof our discern? ng customers. Our product line is specifically designed to encompass a wide range of kitchenware, including Dinner Sets, S.S. Casseroles, S.S. Multi Kadai, S.S. Water Bottles, Stainless Steel Sheets, Stainless Steel Circles, and various types of utensils. We are also engaged in trading of basic raw material like S.S. Patta, S.S. Sheet, S.S. Coil, S.S. Scrap, S.S. Pipe, M.S. Round (Mild Steel Round) and M.S. beam and so on for our various customers.

These products showcase our Companys commitment to providing high-quality stainless-steel kitchenware that spans a wide spectrum of categories. With a focus on innovation and quality, our offerings are crafted to meet the unique preferences and requirements of our diverse customer base.

Our Company specializes in the trading and marketing of stainless-steel kitchenware products through the distinguished brand "DOLPHIN." Employing an outsourcing model, the business collaborates with Dhruvish Metals LLP, a subsidiary company of Sai Swami Metals and Alloys Limited, to source complete kitchenware products. Dhruvish Metals manufactures all kitchenware products, including comprehensive packaging, which is then sent to Sai Swami for further sales and distribution. This end-to-end approach underscores the commitment to delivering high-quality products to customers, emphasizing a streamlined and quality-centric production process through the strategic integration of subsidiary companies. The synergy between Sai Swami and Dhruvish Metals ensures efficiency and excellence, strengthening the brands market positioning.

Two experienced and technically sound directors, Mr. Nipun Anantlal Bhagat and Ms. Kashmira Dhirajlal Mehta, both residing in Ahmedabad, lead the foundation of our company. With over 30 years of trade experience in ferrous and nonferrous met?is, as well

as stainless Steel scraps, specializing in marketing stainless Steel sheets, clrcles, and advanced utenslls and appliances under the esteemed DOLPHIN brand, the company boasts a team of experienced individu?is dedicated to steering it to new heights.

Our Promoter, Mr. Nipun Anantlal Bhagat, through its strategic evolution, has emerged as a dynamic player in the stainless-steel industry. From its humble beginnings in marketing to establishing manufacturing units and enduring challenges, the companys commitment to quality and innovation remains unwavering. The DOLPHIN brand stands as a beacon of STRENGTH, WEAKNESS, OPPORTUNITIES & THREATS.

Strength:

1. Experienced promoter and Management Team

2. Consistent focus on quality

B. Diversified Product Portfolio

4. Established sales and distribution network in Gujarat.

Weakness:

1. Working Capital Intensive Business;

2. Limited Geographical Reach;

3. Lack of Human Resource.

Opportunities:

1. Enhancing operational efficiency

2. Growing domestic demand

3. Prospects of huge Infrastructural development in India.

Threats:

1. Slow industry growth

2. High level competition

3. Fluctuation in Stainless Steel prices

4. Technological Change

RISK AND CONCERNS:

1. Our dependence on limited number of customers/suppliers/brands for a significant portion of our revenues;

2. Any failure to comply with the financial and restrictive covenants under ourfinancing arrangements;

3. Our ability to retain and hire key employees or maintain good relations with our workforce;

4. Impact of any reduction in sales of our services/products;

5. Rapid Technological advancement and inability to keep pace with the change;

6. Increased competition in industries/sector in which we op?rate;

7. General economic and business conditions in India and in the markets in which we op?rate and in the local, regional and national economies;

8. Changes in laws and regulations relating to the Sectors in which we op?rate;

9. Political instability or changes in the Government in India or in the government of the States where we op?rate could cause us significant adverse effects;

10. Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;

11. Occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition; and

12. Our inability to successfully diversify our product offerings may adversely affect our growth and negatively impact our profitability.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

One of the important pillars of governance is a robust internal Controls framework that assists the Corporation to achieve predictable and desi red outcomes. It helps in aligning Controls with the dynamicsof constant challenges and changes in risk profile, arising due to varying internal and external factors. The internal Controls framework established by the Company is commensurate with the size of operations and complexity of its businesses. All internal Controls are well aligned with the evolving business needs, objectives, and overall strategic direction.

The Company ensures integrity in conducting its business, safeguarding of its assets, timely prepararon of reliable financial information, accuracy and completeness ?n maintaining accounting records, and prevention and detection of frauds and errors through a set of detailed policies and procedures.

The Board of Directors and Management at all levels exhibit the right tone at the top through their actions, behavior, and directives. The Code of Conduct emphasizes the corporate culture and val?es of the Company which serves as a beacon for the employees and ?nculcates the importance of integrity and ethical val?es. Suppliers must conform to a sep?rate Code of Conduct as a part of the registration process to ensure that they align to the Compan/s commitment to seek sustainable growth. The Code of Conduct and the Whistle-blower/Vigil Mechanism policies are available to both employees and business partners, to enable them to raise genuine concerns about any actual or suspected ethical / legal violationsor misconduct orfraud, with adequate safeguards against victimization, fear of punishment or unfair treatment.

Financial and Operation Highlights: The Gross Revenue from operations is Rs. 1631.69 lakhs for the financial year 2023-24 as compared to Rs. 0.00 lakh for the financial year 2022-23. (on Standalone Basis)

Financial and Operation Highlights: The Gross Revenue from operations is Rs. 4073.08 lakhs for the financial year 2023-24 as compared to Rs. 626.76 lakh for the financial year 2022-23. (on Consolidated Basis)

KEY FINANCIAL RATIOS on Standalone Basis:

Key Ratios	FY 2023-24	FY 2022-23	Variance	Explanation, if required
Current Ratio	1.96	1.03	0.92	The Rise in current ratio can be attributed to heightened inventory & receivables, Coupled with reduction in Short term borrowing & Other Current Liabilities
Debt-Equity Ratio	1.02	839.60	-1.00	The Down in Debt-Equity Ratio can be attributed to heightened Shareholders equity, Coupled with a reduction in Total Debt.
Debt Services Coverage Ratio	0.44	0.00	1.00	This Ratio is increa sed due to repayment of debt and increase in operating income.
Return Equity Ratio	0.00	0.00	1.00	This Ratio shows that increase in profitability of the company and Effectiveness of generating profit compare with shareholder equities. Because l5tyear of Company, and production Start in F.Y. 23 24 i.e. Current year.
Inventory turnover ratio	2.50	0.00	1.00	Because lst year of company and production start in F.Y. 23-24 i.e. Current Year
Trade Receivable Ratio	0.91	2.00	(-1.09)	This Ratio is decreased due to decrease in Trade Receivable
Trade Payables Turnover	0.45	2.00	(-1.55)	This Ratio is Decreased due to Decrease in Trade payables.
Net capital turnover ratio	6.29	0.00	1.00	Because lst year of Company, and production Start in F.y. 23-24 i.e. Current Year.
Net profit ratio	0.06	0.00	1.00	Because lst year of Company, and production Start in F.y. 23-24 i.e. Current Year.
Return on Capital employed	0.31	0.00	1.00	Because lst year of Company, and production Start in F.y. 23-24 i.e. Current Year.
Return on investment	0.20	0.00	1.00	Because lst year of Company, and production Start in F.y. 23-24 i.e. Current Year.

 

		FOR, SAI SWAMI METALS AND ALLOYS LIMITED
	Sd/-	Sd/-
	NIPUN ANANTLAL BHAGAT	KASHMIRA DHIRAJBHAI MEHTA
Date: 28.05.2024	Managing Director	CFO Cum Whole time Director

KEY FINANCIAL RATIOS on Consolidated Basis:

Ratios

Sr. No. Ratios	Numerator	Denominator	As at March 31, 2024	As at March 31, 2023	Variance	Explanation for any change in the ratio by more than 25% as compared to the preceding year
1 Current Ratio	Current Assets	Current liabilitles	1.S7	1.01	0.55	The Rise in current ratio can be attributed to heightened inventory & receivables, Coupled wlth a reductlon in Short term borrowing & Other Current Liabilities
2 Debt-Equity Ratio	Total Debt	Shareholders equity	1.83	71.36	-0.97	The Down in Debt-Equity Ratio can be attributed to heightened Shareholder equity, Coupled with a reduction in Total Debt.
3 Debt Service Coverage Ratio	Earnings available for debt Service	Debt Service	0.S6	0.01	108.92	Thls Ratio is increased due to repayment of debt and increase in operating income
4 Return on Equity Ratio	Net profit after taxes Less preferente dividend (if any]	Average shareholders equity	0.58	0.14	3.09	This Ratio is increased due to increase in Profit and Shareholders fund.
5 Inventor/ turnover ratio	Cost of goods sold or sales	Average inventory	3.66	1.40	1.61	This Ratio is Increased due to increase in Average inventory
6 Trade Receivables turnover ratio	Net credit sales	Average	0.51	2.00	-0.74	This Ratio is Decreased due to Decrease in Trade Receivables .
		trade receivables
7 Trade payables turnover ratio	Net credit purchases	Average trade payables	0.38	2.00	-0.81	This Ratio is Decreased due to Decrease in Trade payables .
8 Net capital turnover ratio	Net sales	Average worklng capital	11.51	69.63	-0.83	This Ratio is Decreased due to increase in Average working capital.
9		Net sales	0.0531	0.00403	12.17
Net profit ratio	Net Profit after tax					This Ratio is increased due to increase in Net Profit & Increase In Sales
10 Return on Capital employed	Earning before interest	Capital employed	0.42	0.03	14.18	This Ratio is increased due to increase in EBIT & Increase In Capital employed
	and taxes
11 Return on investment	Income from	Cost of investment	0.27	0.02	13.87	This Ratio is increased due to increase in PAT
	investments

 

		FOR, SAI SWAMI METALS AND ALLOYS LIMITED
	Sd/-	Sd/-
	NIPUN ANANTLAL BHAGAT	KASHMIRA DHIRAJBHAI MEHTA
Date: 28.05.2024	Managing Director	CFO Cum Whole time Director