simmonds marshall ltd share price Management discussions

BUSINESS OVERVIEW:

The main business of the Company is manufacturing and sale of Industrial Fasteners.

OPPORTUNITIES, THREATS, OUTLOOK, RISKS AND CONCERNS:

The year 2022-23 saw the effects of Covid abate significantly, with citizens as well as businesses finally reverting to normalcy. However, the flip side was the impact of inflationary trends and the Russia-Ukraine conflict impacting commodity prices. Indias retail inflation remained high and for much of the year was above 6%. To combat this, the RBI regularly raised its policy repo rate, starting May 2022, with cumulative increase being 250 basis points. In addition, there was an impact of higher global commodity prices and depreciation of the Indian rupee. However, despite these critical challenges, India emerged as the fastest growing major economy in the world. Indias GDP is estimated to grow at 7% in FY 2023 and at 6% in FY 2024. Despite the global slowdown, Indias economic growth rate is stronger than in many peer economies and reflects relatively strong domestic consumption and lesser dependence on global demand.

The Indian automotive industry has grown by almost 12% in the FY 2022-23. However, two-wheeler segment is still lower comparative to FY 2018-19. It has been hit badly over the past three years and has made only a moderate come back. The domestic automotive industry is expected to grow at high single-digit levels in 2023-24. According to the reports, the demand for the passenger vehicles segment is expected to grow at 6-9 per cent, commercial vehicles by 7-10 per cent, two-wheelers by 6-9 per cent and tractors by 4-6 per cent in FY 2023-24.

With the challenges and Indias economic prospects, the Company expects a significant improvement in performance for financial year 2023-24

EXPORTS:

During the year total export stood at Rs. 1527.01 Lakhs as against of Rs. 2086.99 lakhs in the previous year. Company is estimating constant improvement in export in coming years.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Internal Control Systems are designed to ensure the reliability of financial and other records and accountability of executive action to the managements authorization. The internal control systems are reviewed by the top management and by the audit committee of the board and proper follow up action is ensured wherever required. Regular audit committee meetings are held where statutory auditors as well as internal auditors participate and internal audit reports are discussed and reviewed.

FINANCIAL AND OPERATIONAL PERFORMANCE:

During the year under review, the Company has achieved the total revenue from operations of Rs. 17097.41 Lakhs as against Rs. 14716.69 Lakhs in the previous year and has incurred loss after tax of Rs. 236.13 Lakhs as against the net loss of Rs. 532.45 Lakhs in the previous year.

Details of significant changes in key financial ratios:

Sr. No Key Ratios	2022-23	2021-22	Remarks
1 Debtors Turnover (times)	6.97	5.81	*
2 Inventory Turnover (times)	2.82	2.52	*
3 Debt Service Coverage (times)	0.95	0.77	A
4 Current Ratio (times)	1.11	1.14	*
5 Debt Equity Ratio (times)	1.46	1.49	*
6 Net Capital T urnover (times)	19.48	14.96	#
7 Net Profit Margin (%)	(1.61)	(3.32)	**
8 Return on Capital Employed (%)	7.84	4.53	@

* There has been no significant change in key financial ratios

A Decrease in loss has resulted in improvement in the ratio

# Increase in revenue and operations resulted in improvement in ratio

@ Increase in profit before interest and taxes has resulted in improvement in the ratio

HUMAN RESOURCES, INDUSTRIAL RELATIONS, LEARNING AND DEVELOPMENT:

The Company believes that Human Resources are its key assets. The total number of employees of the Company is three hundred and eighty. The Companys HR policy focuses on developing the skill and competencies of all the employees, facilitating team work and total employee involvement, providing a happy work environment to the employees and support to their families and remaining a socially responsible Company contributing to the society.

Learning is given the utmost importance in the Company. Training programs focus on improving employees current skills and competencies as well as developing them for their future roles as part of their career development. The Company ensures overall development of every employee and all inputs are provided to reach the expert level of their skill and competency.

In the Company, HR processes are aligned to make employees feel that they are a part of the Company family. The Company creates the platform for employees to voice their opinion and make suggestions to improve the working environment. The Company maintains regular communication with employees to make them feel connected with the Company and perform their jobs most effectively.

The Company focuses on inculcating the habit of continuous improvement and motivating employees to participate in improvement activities for the organisation. The Company continues to maintain its record of industrial harmony.

HEALTH, SAFETY AND ENVIRONMENT:

The Company strives to manufacture products with zero pollution and zero accidents, by continuously improving its environmental and occupational health and safety management systems. The Company accords paramount importance to the health and safety of its employees. The factory has obtained certification for conformance to ISO 45001-2018 (Occupational Health and Safety Management System), ISO 14001-2015 (Environmental Management System), ISO 9001-2015 (Quality Management System) and IATF 16949-2016

CAUTIONARY STATEMENT:

Statement in the Management Discussion and Analysis describing the Companys objectives, expectations, estimates or predictions may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could influence the Companys operations include a downtrend in the automobile industry - global or domestic or both, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, foreign currency fluctuations and interest costs.