Shri Ram Switchgears Ltd Management Discussions.


Global economy

FY 2020-21 has been an unprecedented year in modem 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 2019 exacerbated further in 2020 by the shock delivered by the pandemic. As a result, the global GDP is believed to have contracted by ~3.3% in 2020, 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 2020 - 21.

Indian economy

The Indian economy too witnessed similar stress, with the nationwide lockdown from end March 2020 bringing business activities to a standstill for the major part of April and May 2020. 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 2020, have led to a sequential recovery in economic output. Indias real GDP clocked a 0.4% growth in the October-December 2020 quarter on a year-on-year basis after a sharp fall in the first two quarters of FY 2020-21. 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 taxes. On the exchange rate front, post the initial bout of depreciation in the Indian currency in the beginning of the financial year, the currency has been relatively well supported on account of robust portfolio inflows in the economy as well as a better current account position.


The rollout of the vaccination drive across the major economies, including India, in the last quarter of FY 2020-21 has 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 2021-22 on the global as well as the domestic front. However, a lot would hinge on how the pandemic plays out, given the resurgence of the virus and the spread of infections. There has been a re-imposition of restrictions on business activity in many states and this has again disrupted operations of our vast supply chain network. This is expected to lead to uncertainty in demand in many areas. 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 component 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.

Indias power sector is the one of the most diversified sector in the world. In India, source of power generation range from conventional sources such as Coal, Lignite, Natural gas, Oil, hydro and Nuclear power to viable non-conventional sources such as wind, solar, and agricultural and domestic waste etc. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed capacity is required.

India, a South Asian nation, is the seventh-largest country by area, the second-most populous country with over 1.30 billion people, and the most populous democracy in the world. India is the fourth largest economy in the world in terms of purchasing power parity (PPP). India has emerged as the fastest growing major economy in the world as per the Central Statistics Organization (CSO) and International Monetary Fund (IMF).

Indian power sector is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. The Government of Indias focus on attaining ‘Power for all has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and manpower).

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. Our Company is eligible for the power development projects issued by World Bank and Asian Development Bank. We have a vast experience in the power sector and have whole gamut of Power Distribution and Transmission products in our product portfolio. This enables us to undertake and complete EPC contracts within quickest time frame and of the highest quality standards.

Our customers are majorly the Power DISCOMs (Distribution Companies). We cover the states of Maharashtra, Rajasthan, Gujarat, Madhya Pradesh, Delhi, Odisha, Uttar Pradesh for supply of our products and services. From engineers to skilled labour, everyone is motivated to manufacture the highest quality products in our company. Our Company has put a lot of systems in place for quality check and control. We have been accredited with "ISO: 9001-2008" certification for design and development, production, installation & marketing of electrical switchgear & transformers. We have always been a front runner in adapting technology ahead of its times.

For our manufacturing facility, we do not need a water or air treatment plant as we are proud to say that our plant is a zero pollution emission plant and received certificate from District Trade & Industries Centre, Ratlam. Our company is a member in general category by Confederation of Indian Industry (CII) for its State Council of Madhya Pradesh.


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.


The recent modernization and expansion program has enabled the company to reduce cost of production substantially. The management has also planned to introduce new value added products in the near future. 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 up tick in the power transformer segment going forward.

• The announcement of UDAY, RAPDRP, PPR & DDUGJY and the participation of 15 States already in the program has given many players some hope that the fiscal condition of DISCOM would improve and this would lead to more aggressive DTR purchases in the next few years to reduce the losses.

• 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.


Due to outbreak of pandemic COIVD 19, entire country is going through a very difficult phase. The government had to impose lockdown for various periods in different parts of the country. The lockdown has entirely shattered the economic progress of the entire nation. The pandemic has posed biggest threat before entire country as well as industry. Further we operate in an increasingly high 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.

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.


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 Lakhs, divided into 120 Lakhs equity shares of Rs. 10/- each. The issued, subscribed and paid up capital stood at Rs. 1001.05 Lakhs as on March 31, 2021.

(b) Security Premium Reserve

The balance in securities premium reserve account as on March 31, 2021 amounted to Rs. 240.30 Lakhs.

(c) Profit and Loss Account

The balance in the Profit and Loss account as at March 31, 2021 is Rs. (1310.52 Lakh) which has reduced from Rs. 370.60 Lakh as reported in the previous year.

2. Deferred Tax Assets / Liabilities

We recorded a decrease in deferred tax assets to Rs. 13.12 Lakh as on March 31, 2021 as compared to Rs. 14.69 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. 3054.18 Lakh as on March 31, 2021 which was Rs. 3340.59 Lakh as on March 31, 2020.

4. Cash & Cash Equivalents

The figure of Cash & Cash Equivalents was reported at Rs. 303.15 Lakh as on 31st March, 2021 which was Rs. 574.75 Lakh in the previous year.

5. Income from Operations

Income from operations reported a figure of Rs. 905.18 Lakh as on 31st March, 2021 as compared to Rs. 2242.96 Lakh in the previous year ended 31st March 2020.

6. Revenue

Total revenue from operations decreased from Rs. 2242.96 Lakh as on 31st March 2021 to Rs. 905.18 Lakh as on 31st March 2020.

7. Other Income

Income from other sources during the current year ended 31st March, 2021 was Rs. 20.59 Lakh as compared to Rs. 57.56 Lakh in the previous Financial Year ended 31st March 2020.

8. Earning Per Share

Earnings per share for the Financial Year 2020-21 is Rs. (16.51) /- in comparison to figure reported for Financial year 2019-20 i.e. Rs. (2.98)/-.

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.

Your companys philosophy on people is deep rooted in building and nurturing talent and leadership within the organization. We believe that our people have always been the drivers of innovation, efficiency and productivity leading to our consistent track record of growth The Company continuously invests in the development of its human resources through a series of employee friendly measures aimed at talent acquisition, development, motivation and retention. Our focus and belief lies in enabling and empowering our talent pool for the challenges of tomorrow by providing new avenues of learning and development through behavioral and leadership interventions.

Human Resources at Shri Ram Group of Industries serve as a steward for excellence and leadership through:

• Organizational effectiveness by ensuring good governance and adopting best practices

• Fair process for recruitment, retention and enrichment

• Continuous Employee Engagement

• By providing regular performance based incentives

Employee engagement at the company does not end with hiring of an employee; in fact it begins with the employees appointment and continues through his whole career span in the organization.

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

S. No. Type of Ratio 2021 2020
1. Debtors Turnover Ratio 0.28 0.61
2. Inventory Turnover Ratio 0.18 0.44
3. Interest Coverage Ratio -1.77 0.03
4. Current Ratio 2.29 1.48
5. Debt Equity Ratio -127.59 1.78
6. Operating Profit Margin Ratio -1.16 0.13
7. Net Profit Margin Ratio -1.82 -013


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