Shilchar Tech. Management Discussions

a) Industry Structure and Developments

The global power transformer market size is expected to reach a valuation of USD 38.91 billion by 2030 and is expected to expand at 7.1% CAGR from 2023 to 2030. Technical developments and growing electricity consumption is expected to accelerate power transformer industry growth.

b) Opportunities

A number of government initiatives to upgrade the current grids along with the installation of cutting-edge technology will fuel the expansion of the power transformer industry. Global demand is anticipated to be driven by an increase in the use of 100 MVA to 500 MVA products in transmission networks.

The government has also announced large target for installation of renewable energy capacity. This is generating high requirement of transformers for solar & wind applications.

Various governments in Middle East & Africa are also taking initiatives in renewable energy production which is driving high demand for transformers.

c) Threats

Major threat for transformer industry is fluctuation in raw material cost like Copper, Steel, Oil, etc … The material cost has stabilize in last one year and there is no indication of any major fluctuation hence risk is minimal.

d) Segment wise performance

Distribution transformer division is having large orders on hand and it will continue to receive orders throughout the year due to high demand in foreign countries.

Medium power transformer division is also having good orders and due to large projects coming up in renewable sector all over the world, the demand will be generated continuously.

e) Internal control system

Your Companys internal controls systems are commensurate with the nature and size of its business operations. Adequate internal Audits and internal controls, systems and checks are in place and the management exercises financial controls on the operations through a well – defined processes.

f) Discussion on financial performance with respect to operational performance.

The Company earned operational income of Rs. 28,024.12 lakhs compared to Rs. 18,018.21 lakhs for the previous year. The other income is Rs. 808.12 lakhs compared to Rs. 335.48 lacs in the previous year. The total revenue for the year is Rs. 28,832.24 lacs against Rs. 18,353.60 lakhs in the previous year. Profit after tax is Rs. 4,312.24 lakhs as compared to previous year figure of Rs. 1,911.62 lakhs.The Company has concentrated on catering needs of renewable energy sector including solar and wind energy in local market wherein the Company has been enjoying commendable position being one of the top companies in India supplying transformers for renewable energy.

g) Material developments in Human resources / Industrial Relations front, including number of people Employed.

Your Company continued its activities during the year in a cordial atmosphere with utmost co-operation amongst employees and the management. As of the date of the report, the total numbers of the employees of Company are 115. The management is committed to promote safety, occupational health and proper environment is design, planning, training and completion of all tasks. Trainings are imparted to workmen in various new techniques and systems. During the period under review, your Company remains "Zero Discharging Pollution Unit". The Company undertakes various CSR activities before it became mandatory for the up liftment of society, betterment of human being, and the Company believes growth of all stakeholders vis a vis growth of the Company.

During the year, your company received an award by GEO for " Best Practices & Innovation in the field of HR" h) Details of significant changes (i.e. Change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with details explanations as under:

Ratios Current Financial Previous Financial Details Explanations
Year2022-2023 Year 2021-2022
Debtors Turnover Ratio 2.87 3.61 Reduction indicate speedy recovery
Inventory Turnover Ratio 10.26 6.13 Due to increase in holding period of inventory in proportion of increase in sales.
Interest Coverage Ratio 374.06 18.79 Only Rs. 15.57 lakhs interest on Term Loan which was fully paid in January 2023
Operating Profit Margin % Ratio 20.75% 10.62% Due to increase in Profitability
Net Profit Marin % or sector-specific equivalent ratio (as Applicable ) 15.38% 7.79% Due to increase in Profitability

i) Details of any change in return on Net worth as with immediately previous financial year.

Net worth increased from Rs.7976.94 lakhs to Rs.12144.23 Lakhs due to increase in profitability of the Company.