Shri Ram Switchgears Ltd Management Discussions

FINANCIAL YEAR 2022 - 22 - A GLANCE

MACRO-ECONOMIC SCENARIO

Global economy

FY 2021 - 2022 has been an unprecedented year in modern times, with the COVID-19 pandemic impacting human life extensively across the globe. Its impact on the economic front, too, has been significant. The slowdown across economies witnessed in 2020 exacerbated further in 2021 by the shock delivered by the second wave of the pandemic which proved to be more devastating the first one. As a result, the global GDP is believed to have contracted majorly, with all major economies moving into negative territory. The economic upheaval could have been much more severe had it not been for the quick and synchronized response from central banks and governments globally, although this too varied across countries. The increase in balance sheet sizes of almost all central banks and the supportive measures undertaken by governments globally ensured easy availability of funding and support for both private and public consumption. This support has been instrumental in the progressive recovery seen in the last two quarters of the calendar year as compared to the significant contractions observed in the first two quarters. The sequential recovery in global trade coupled with the easy liquidity conditions have also led to a sharp rise in commodity prices, especially in the last quarter of FY 2021 - 2022.

Indian economy

The Indian economy too witnessed similar stress, with the local lockdown from April 2021 bringing business activities to a standstill for the major part of April and May 2021. An accommodative monetary policy from the Reserve Bank of India (RBI) and fiscal policy interventions by the central government, coupled with the gradual reopening of the economic activities from June 2021, have led to a sequential recovery in economic output. However, the recovery is largely centered on the formal part of the economy. The informal players, especially the Micro, Small and Medium-sized Enterprises (MSMEs) in many industries have taken a disproportionately large hit. Inflation picked up over the year, despite the pandemic, primarily led by food inflation and higher fuel rates.

Outlook

Successful vaccination drive across the major economies, including India accorded a much-needed boost to sentiments around a sustained recovery of economic activity across the globe. Almost all major central banks have pledged to continue an accommodative monetary stance to reinforce the economic green shoots. Coupled with the base-effect, economic growth is expected to bounce back strongly in FY 2022-23 on the global as well as the domestic front. The challenges to business posed by this inflationary pressure and the uncertain market conditions, would place strong emphasis on managing the business in a dynamic manner and altering operational priorities to suit the changing market conditions.

Economic Background and Financial Background

Power is one of the critical components of infrastructure crucial for the economic growth and welfare of nation. The existence and development of the adequate infrastructure is essential for the substantial growth of the Indian economy.

We are involved in the engineering and manufacturing of Electrical products. We manufacture Transformers (EHV, Power, Distribution, and Special Application) upto 5 mVA - 132 kV Class as well as Oil Type Compact Sub-Stations. We manufacture full range of HT & LT switchgears from Distribution boards to Distribution Boxes, Control and Relay Panel, Feeder Pillars, ACB Boxes, Single Phase Boxes, MCB & MCCB panels, Junction Boxes, A.C./D.C. Boards and other related products. We also undertake EPC contracts in the Power Transmission and Distribution sector covering full range from design and engineering to testing and commissioning of electrical sub stations and transmission lines. The Company is also looking for alternative business plans to revive the business.

Outlook

The company carries a strong goodwill due to its fair dealings and straight polices. The company believes that its long association and strategic arrangement with the suppliers, customer, banks and governments will be quite beneficial in the long run and shall provide various opportunities to the company in its business. The company is trying to keep up with the pace of growth of the Indian economy.

Opportunities

The company is also trying to trap new areas for marketing its products.

? The opening up of new transmission projects and the debottlenecking of old stuck projects has led to order wins by many firms in the recent past for the Power Transformers. ? The upcoming new transmission projects and the green energy corridor will see more uptick in the power transformer segment going forward. ? The government is continuously promoting its campaign "Vocal for Local" emphasizing the requirement of using and promoting local products. Its mandate of saying no to Chinese products is very clear and the same is going to make a long way of success for local manufacturers including your company.

Threats

Due to outbreak of pandemic COIVD 19, entire country went going through a very difficult phase. Further we operate in a highly competitive market, with participation of organised and unorganised sector. We face competition from other manufacturers, traders, suppliers and importers of electric equipment in relation to our offerings. Suppliers in the electric equipment industry are based on key attributes including technical competence, product quality, strength of sales and distribution network, pricing and timely delivery. While our competitors in the organised sector focus more on technology and quality of their products, their unorganised counterpart supply their products at extremely competitive prices, which we may be unable to effectively compete with. For instance, we face competition from electric equipment of Chinese origin, primarily in the switch gear and lighting equipment verticals, which have gained significant presence in the Indian electric equipment market and which may be sold at more competitive prices then what we offer. Further, the company is also facing serious financial crunch for past two years for which the Board is taking all the corrective steps.

Internal Control System and Adequacy

The company has adequate internal control procedure commensurate with its size and nature of the business the internal control system is supplemented by regular reviews by management and well documented policies and guidelines to ensure reliability of financial and all other records to prepare financial statements the company continuously upgrades this systems in line with best accounting practices the company is benefited from having a team of professionals as promoter and independent directors who are capable of exercising various checks and controls effectively.

REVIEW OF OPERATIONAL AND FINANCIAL PERFORMANCE

1. Sources of funds/ Application of funds (a) Share Capital

At present, the Company has only one class of shares – equity shares of par value of Rs. 10/- each. The Companys authorized share capital is Rs. 1200 Lakh, divided into 120 Lakh equity shares of Rs. 10/- each. The issued, subscribed and paid up capital stood at Rs. 1001.05 Lakh as on March 31, 2022.

(b) Security Premium Reserve

The balance in securities premium reserve account as on March 31, 2022 amounted to Rs. 240.30 Lakh.

(c) Profit and Loss Account

The balance in the Profit and Loss account as at March 31, 2022 is Rs. (2993.22) Lakh which has reduced from Rs. (1310.52) Lakh as reported in the previous year.

2. Deferred Tax Assets / Liabilities

We recorded a decrease in deferred tax assets to Rs. 12.83 Lakh as on March 31, 2022 as compared to Rs. 13.12 Lakh during the previous year. We assess the likelihood that our deferred tax assets will be recovered from future taxable income. Deferred Liabilities were reported to be Nil.

3. Trade Receivables

There is a decrease in trade receivables of the company as compared to previous year. The figure of Trade Receivables was reported at Rs. 2727.67 Lakh as on March 31, 2022 which was Rs. 3054.19 Lakh as on March 31, 2022.

4. Cash & Cash Equivalents

The figure of Cash & Cash Equivalents was reported at Rs. 132.64 Lakh as on March 31, 2022 which was Rs. 303.15 Lakh in the previous year.

5. Income from Operations

Income from operations reported a figure of Rs. 433.11 Lakh as on March 31, 2022 as compared to Rs. 905.18 Lakh in the previous year ended March 31, 2022.

6. Total Income

Total income from operations decreased from Rs. 925.77 Lakh as on March 31, 2022 to Rs. 442.48 Lakh as on March 31, 2022.

7. Other Income

Income from other sources during the current year ended March 31, 2022 was Rs. 9.37 Lakh as compared to Rs. 20.59 Lakh in the previous Financial Year ended March 31, 2022.

8. Earning Per Share

Earnings per share for the Financial Year 2021 - 22 is Rs. (16.81) /- in comparison to figure reported for Financial year 2021 - 2022 i.e. Rs. (16.51)/-.

Human resources

The company has impressive record of maintaining human relations at all levels in past. Due to the professional approach of the management, the company has rarely faced any unrest or discomfort in connection with employee relation. The management and employee relationships remained cordial even during period of restructuring of employees/labor force.

The company is also carrying regular performance appraisal of employees to enable them identify their strengths and weaknesses and to strive for better performance.

Details of changes in Key Financial Ratios

Following is the comparative chart of all the significant financial ratios of the company

CAUTIONARY STATEMENT

This report contains several forward-looking statements that involve risks and uncertainties, including, but not limited to, risks inherent in Shri Rams growth strategy, acquisition plans, dependence on certain businesses, dependence on availability of qualified and trained manpower, economic conditions, government policies and other factors. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the financial statements included herein and the notes thereto