Sarthak Industries Ltd Management Discussions.

Your Company is primarily engaged in manufacturing of LPG Cylinders. The LPG Cylinders are supplied to Oil Companies like Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd. etc. and also to Private Companies. Apart from this, Company is also engaged in trading of agri-commodities, non agri-commodities and other businesses on opportunity basis. As a major of diversification, the Company has also decided to engage in Mining and Mineral Based Industry.

The global economy recovered strongly in the year 2021-22 even as new variants of the COVID-19 virus fueled additional waves of the pandemic. During the year 2021-22, the Companys performance showing increasing trend in turnover but decreasing in profitability as compared to last year. Looking at global economic slowdown and other factors, the performance of Company is satisfactory. The Management is hopeful that Companys future is bright in the coming years.

According to the global economic outlook published by the IMF, Global growth is projected to slow from 6% in 2021 to 4.9% in 2022 and 3.6% in 2023 (according to IMF). War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7% in advanced economies and 8.7% in emerging market and developing economies.

Opportunities and Threats

COVID-19 pandemic and Russia-Ukraine war has surely impacted the economic growth of world. Accordingly as of 31st March 2022, based on the facts and circumstances existing as of that date, the Company does not anticipate any material uncertainties which affects its liquidity position and also ability to continue as a going concern. However, the impact assessment of Covid-19 is a continuing process given the uncertainties associated with its nature and duration. The management will continue to closely monitor the evolving situation and assess its impact on the business of the Company.

Depending on market opportunities the Company is undertaking Merchant Trading activities of various commodities.

The future performance of your Company would depend to a large extent on its ability to successful diversification, market of commodities. We are hopeful that through the combination of market developments and expansion activity, there will be healthy growth over the next few years. Due to COVID-19 pandemic and Russia-Ukraine war, the situation is uncertain and it is difficult to predict when economies will fully normalise. Hence, FY23 is likely to be a challenging year.

Segment-wise or product-wise performance

Your Company has identified two business segments in line with the Accounting Standard on Segment Reporting. These are:

Cylinders - Manufacturing and repairing of LPG cylinders
Merchant Trading - Trading of various commodities, materials etc.

The segment wise performance in detail is given in Note 42 to the audited accounts of the Company as available in this Annual Report. Outlook

Due to COVID-19 pandemic and Russia-Ukraine war, the financial year 2022-23 will be a challenging year for the global economy as well as Indian economy. The Management is hopeful that in future, the Company will grow its manufacturing and trading activities and will get good orders for the manufacturing of cylinders as well as repairing of old cylinders.

Risk and concerns

Profitability may be affected on account of competition from existing and prospective manufacturers of the Companys products. The Company is exposed to risks from Change in policy of similar companies which are major buyers for the Companys product, further increase in input costs, higher levies, and changes in Govt. Policies/laws of land, etc. may affect profitability of the Company.

Internal control system and their adequacy

The Company maintains adequate internal control systems, which provide reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of Company assets and compliance with applicable laws and regulations, etc.

The adequacy of the same has been reported by the statutory auditors of your Company in their report.

Financial Performance

The performance of the Company for the financial year 2021-22 is summarized below:

Financial Performance

The performance of the Company for the financial year 2021-22 is summarized below:

(Rs. in Lacs)

Balance Sheet As at March 31,2022 As at March 31,2021
a. Property, Plant and Equipment 478.18 349.38
b. Right-of-use assets 1.87 1.94
c. Capital Work-in-progress 149.38 149.38
d. Intangible assets 0.36 0.67
e. Financial assets 453.66 383.23
f. Deferred tax assets (net) 1.78 4.31
g. Other Non-current assets 1529.64 1176.45
h. Current assets 5293.61 4927.38
i. Non current assets held for sale - -
j. Total Equity 3949.49 3760.59
k. Non- current liabilities 84.86 51.62
l. Current liabilities 3874.13 3180.53
m. Liabilities directly associated with assets classified as held for sale - -

Summarized Profit and Loss Account

(Rs. in Lacs)

Particulars 2021-22 2020-21
Revenue from operations 16364.52 13354.29
Other Income 247.62 176.86
Profit/ (Loss) before Depreciation, Finance Cost, Exeptional items & Tax Expenses 431.46 452.30
Less: Depreciation 80.19 66.36
Profit/ (Loss) before Finance Cost, Exceptional Items and Tax Expenses 351.27 385.94
Less: Finance Cost 122.84 91.92
Profit/ (Loss) before Exceptional Items and Tax Expenses 228.43 294.02
Add/ (Less): Exceptional items - -
Profit/ (Loss) before Tax Expenses 228.43 294.02
Less: Tax Expenses 60.51 84.78
Profit/ (Loss) after Taxation 167.92 209.24
Add/(Less): Other Comprehensive Income 20.97 96.25
Total Comprehensive Income 188.89 305.49
Balance brought forward from previous year 3063.70 2758.21
Amount available for appropriation 3252.59 3063.70
APPROPRIATION -- -
Amount Carried to Balance sheet 3252.59 3063.70
Paid Up Equity Share Capital 696.89 696.89
Earnings Per share (Rs.10/- each) Basic & Diluted (in Rs.) 2.41 3.00

Material development in Human Resources / Industrial Relations front

Your Company considers the quality of its human resources to be the most important asset and constantly endeavors to attract and recruit best possible talent. Our training programs emphasize on general management perspective to business. The Company continues to empower its people and provide a stimulating professional environment to its officers to excel in their respective functional disciplines.

The industrial relations of the Company continue to remain harmonious and cordial with focus on improving productivity and quality.

The number of permanent employees on the rolls of Company as on 31.03.2022 is 32.

KEY FINANCIAL RATIOS ANALYSIS

Details of key financial ratios are as follows:

S. No. Particulars FY 2022 FY 2021 Remarks
1 DEBTORS TURNOVER RATIO 10.79 7.80 Debtors turnover ratio increased due to higher sales
2 INVENTORY TURNOVER RATIO 20.12 16.66 Inventory turnover ratio also increased due to higher sales
3 INTEREST COVERAGE RATIO 30.06 6.72 ratio increased during the year due to reduction in interest cost
4 CURRENT RATIO 1.37 1.55 Current ratio decreased during the year due to increase in current liabilities.
5 DEBT EQUITY RATIO 0.03 0.02 Ratio decreased due to new loan taken during the year.
6 OPERATING PROFIT MARGIN (%) 2.15% 2.89% Decreased due to lower profitability during the year
7 NET PROFIT MARGIN (%) 1.03% 1.57% Decreased due to lower profitability during the year
8 RETURN ON NET WORTH % 4.25% 5.56% Decreased due to lower profitability during the year

Cautionary Statement

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may constitute “forward looking statements” within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.